Preamble

The House met at Eleven of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

London County Council (Tramways, Trolley Vehicles, and Improvements) Bill (by Order).

Second Reading deferred till Monday, 27th March.

Orders of the Day — SUPPLY.

Considered in Committee.

[Mr. JAMES HOPE in the Chair.]

Orders of the Day — ARMY SUPPLEMENTARY ESTIMATE, 1921–22.

Motion made, and Question proposed,
That a Supplementary sum, not exceeding £4,900,000, be granted to His Majesty, to defray the Charges for Army Services which will come in course of payment during the year ending on the 31st day of March, 1922, to meet Expenditure not provided for in the original Army Estimates of 'the year, on account of Terminal Charges of the War.

The FINANCIAL SECRETARY to the WAR OFFICE (Lieut.-Colonel Stanley): I hope in presenting this Estimate I shall be able to show that it is not due to what may be called working expenses of the Army during the year, but is entirely due to what you may call terminal charges arising entirely out of the War. If it had not been for those terminal charges it would not have been necessary for us to present this Supplementary Estimate. In this imperfect world Governments are no more exempt than private individuals from paying their debts, and it is in order to be able to liquidate those debts that I am presenting this Estimate. The first charge is one of £650,000 for the maintenance of the Standing Army, excluding the Middle East. That excess under head I is due to three causes. The first is the transfer of British troops from the Middle East as a consequence of the change which has been made there, and which, therefore, comes directly on the Army Vote. The second cause is due to the requirements of Ireland, which have involved the retention of officers and men and horses which would not otherwise have been necessary. The third cause is that, although it has been intended to disband four cavalry regiments, as the Secretary of State said last year, it was not found possible to do so as soon as was expected, and therefore they remained longer on our charge. By far the heaviest expenditure under this Vote comes under head 6—terminal and miscellaneous charges.
The explanation at the end of the Estimate gives the principal reasons for these large sums, but I think the Com-
mittee will probably wish that I should go somewhat more fully into detail. The first charge is a sum of £2,800,000 for India. This represents disbursements and disputed items which came up for payment during the past year and have been under discussion for some considerable time, and it is only now that we have admitted the liability. [Interruption.] This does not include Indian troops at all. It is for disbursements made by India on our behalf during the War and just subsequently; for instance, stores and things like that. It includes expenditure previous to last year in Persia, and the incidence of that was in dispute, whether it should come on their charge or on ours. There is a further large sum which represents outstanding balances on field account which are obviously on our charge, but which were paid by them and we have to repay to India. On the question of gratuities there were field deposits, and that might have been settled before, but for the fact that there was considerable discussion between ourselves and India as to the rate of exchange. There have been stores issued and there were charges for details which were not received before 1920–21, and it is only now that we admit the liability of them, because the whole question had to be thoroughly examined.

Colonel WEDGWOOD: How much correspondingly has India had to pay in this connection?

Lieut.-Colonel STANLEY: I am not sure that I can say. This is a charge which was made by them to us and we examined it and if we do not accept it we do not pay it. These matters have been well thrashed out and accepted as a proper charge against us.

Mr. WISE: What rate was fixed on the rupee?

Lieut.-Colonel STANLEY: I could not answer offhand. It is a matter of discussion between the Government of India and ourselves. Then we come to the question of rather over £500,000 for the East African Protectorates. These were all war charges. We have at the present time representatives going into the whole question and clearing up the accounts due from us on such subjects as the King's African Rifles, the issue of gratuities and medals, and certain charges due for the
excess cost of the Gold Coast Regiment over its normal peace costs. Anything in excess of the normal peace cost was a charge on us, the Colony itself only paying the normal peace cost. We have issued instructions for the bulk of this expenditure to be brought to account during the current financial year.

Colonel WEDGWOOD: Is there some outstanding besides?

Lieut.-Colonel STANLEY: I hope not, but the hon. and gallant Gentleman will understand that these questions are extremely difficult and very complicated. I should not like to say for certain that there may not be some more sums still to come on. We are endeavouring to get everything in so as to get it finished up. Then we come to the question of £860,000 which has been paid to the Civil Government of Iraq in final settlement of all outstanding accounts between the Civil and Military Departments up to 31st March, 1921. The Civil Administration was set up during the latter part of the War under the General Officer Commanding, and it then became necessary to arrange that transactions between those two Departments should be on repayment. The division of interest in financial concerns between Civil and Military Departments is not very easy. Claims on both sides were often in dispute; sometimes it was not possible to furnish full particulars, and it was accordingly decided that some agreement should be come to between the respective administrations and that a lump sum in payment should be handed over as a complete settlement up to the 31st March, 1921. There have been long discussions between the local civil and military authorities, and with such data as they could obtain it was unanimously agreed that this sum of £860,000 should be paid by the Army to the civil authority in final settlement of the outstanding claims.

Colonel WEDGWOOD: Were the claims for forage, rations, etc.?

Lieut.-Colonel STANLEY: Not so much that, but sums for the maintenance of refugees, railway and port charges, rent, etc. We would have liked to have been able to make a charge like this in our original estimates, but negotiations were very long and very complicated, and they had not proceeded far enough for us to
be able to make any forecast of what the cost would be.
Under Head VI also there is a charge of £3,500,000 due for shipping and other sea transport. To understand this question involves our going back for some considerable time. It will be realised that after the Armistice, and with the consequent transferring of troops from the theatres of war back home and the general movement of troops, it was quite impossible to form, I will not say a perfectly accurate estimate, but even an approximate estimate. The only way to do so was to base it on a programme of the men, horses and stores that were likely to be moved, but it was not possible to compare the actual estimate with the expenditure until complete accounts had been received and examined. Conditions were abnormal, and there were delays of vessels, and large increases of cost due to various causes, all of which contributed materially to the discrepancy between the estimates and the actual cost. It was clearly impossible to accurately forecast the expenditure on the reconditioning of ships that had been used for Army purposes—this work is still going on—in the original Estimates for 1921. For the reasons already outlined it was impossible to make a close estimate of the balance of accounts, but during 1921, when accounts could be more closely examined and accepted or not, it was possible to make a clear estimate of the cost, and as a result it was recognised that a sum of £3,500,000 is due from the War Office for shipping.
The figures I have given amount to approximately £7,750,000. There are some other items which amount to something under £1,000,000. There are charges for transportation of troops in France and in Georgia in dispute and these have delayed settlement.

Colonel WEDGWOOD: In connection with the transport charges, is the dispute with the French Government or with other Departments in this country?

Lieut.-Colonel STANLEY: I did not want to use the word "dispute." That was not a proper word. I would rather say "under discussion." They are under discussion with the French Government. There was a charge for Armenian refugees. Our responsibilities for Armenian refugees ceased on the 1st
April, 1921, on their transfer to the Civil Government, but rations were issued by the Army to the refugees on behalf of the Civil Government, and repayment has been recovered. That accounts for part of the sum of £200,000 which is shown under Head VI as "Increased Receipts." On other items, including charges in connection with clearance of certain war accounts, we have recovered a sum which goes to make up the £200,000 of increased receipts. These are all the items under Head VI.
The sum under Head VII was obviously an under-estimate at the time the Estimates were presented. It is required on account of pensions which are issued through the Pension Issue Office of the Ministry of Pensions at Chelsea. The reason for the under-estimate was that pensioners who served previous to the War had their pensions reassessed up to the new rate in September, 1919. The majority of reassessments had been carried out by Chelsea Hospital by the 1st April, 3921, but the actual payments, often with considerable arrears, sometimes going back as far as April, 1919, extended into the current financial year and formed part of the year's claims by the Ministry of Pensions on the War Office. The qualifications for reassessment has been somewhat extended, which was not foreseen at the time the original Estimate was formed. These qualifications are that pensioners who served in the Colonial units during the War and pre-War disability pensioners who came up again and served in the late War, had their pensions reassessed on the new scale. I do not think there is anyone who will not recognise that these men were thoroughly entitled to have their pensions reassessed up to the new scale.
These are the items which go to make up the total of £9,934,000. I am glad to say that there are some savings to be set against that. One newspaper which is not generally very favourable to the Government has been good enough to say that we have "some glimmerings of economy."

Lieut.-Commander KENWORTHY: Which one?

Lieut.-Colonel STANLEY: I am not sure, but it is a satisfaction at any rate to find one newspaper saying something
favourable in that way. There is a saving in the Middle East of £500,000, but that does not assist the War Office because we have a less Appropriation-in-Aid by the same amount. Under Head II there is a saving of £860,000 on Territorial and Reserve Forces. That is made up in various ways. When I presented the Supplementary Estimate for the Defence Force in November there were certain savings in the Territorial Force and in the Reserve Force. Those were definite savings made as a result of having created the Defence Force. There are now further savings which were not then in sight. For instance, the numbers of Defence Force were not up to what we estimated. There has been slower progress than had been expected with the building programme. Then there is the sale of buildings which were not required for the reduced forces, and various branches which were not settled when the Estimate was prepared.
On the Army Reserve there is a saving, because the numbers during 1921–22 have not been what was anticipated, and on the Militia there is a saving because provision was made in the original Estimate to enable recruiting to be opened late in the present financial year, but the raising of this force has been postponed, and there are numerous savings of very nearly the whole amount that was voted. The principal savings come under head 5. Those are largely composed of savings on warlike stores and restriction of the building programme. It was intended to start during the financial year certain buildings which have been postponed with an ultimate saving of £1,000,000. There is a similar saving of £500,000 in the Middle East, which is due to the postponement of the building programme, but that again does not accrue to the War Office, because we get a less civil Appropriation in-Aid. There are certain increased savings amounting to £500,000. These are mainly due to receipts from India, from issues of stores on repayment, and also the sale of horses which were surplus to requirements. Those figures amount to £2,410,000 leaving a total of £7,124,000.

Colonel WEDGWOOD: Were those horses brought down from Iraq, or sold there?

Lieut.-Colonel STANLEY: I have said distinctly that they were due to sales of horses which were surplus to requirements.

Colonel WEDGWOOD: But there was a suggestion that if the horses were sold in Iraq, they were going to be brought down on transports from Iraq at great expense.

Lieut.-Colonel STANLEY: They were horses sold in Constantinople. There is a further sum of roughly £2,250,000 which can still be brought into account. An explanation of that is given at the end of the Estimate, When the original total of the Army Estimates 1921–2 was divided between the War Office and the Colonial Office, as a result of savings which appeared then, there was this further sum of £2,250,000, and that was left unappropriated. It is now written off from the provision made in the present Estimate, leaving a net extra provision required for the service of the year of £4,900,000 as shown on the Paper. I think that I have gone broadly through all the questions. I said that had it not been for these terminal charges, we should not have had to ask for a Supplementary Estimate. I think that I am justified in saying that, because if hon. Members will look at the total Estimates, they will see that they come to £9,734,000. There were liabilities which I have detailed, amounting to £8,709,000. That leaves a total of £1,030,000 and against that, exclusive of the saving of £2,250,000 in the Middle East, there is a saving in actual working expenses of the War Office of £2,430,000, which leaves a balance of £1,380,000 in favour of the War Office. I think that I have been through all the points broadly and I hope that we may have this Estimate.

Sir GODFREY COLLINS: I beg to move to reduce the Vote by £100.
I move this reduction in order to protest against the heavy Supplementary Estimate which the hon. and gallant Gentleman has just introduced. With his usual courtesy, he explained in some detail the figures which he has given to the Committee, but in view of the statement made the other evening by the Secretary of State for War, I am surprised that the Committee should now be asked for this considerable sum because, in the course of the Debate, the right
hon. Gentleman disputed the assertion of my right hon. Friend the Member for Peebles (Sir D. Maclean) who argued that the Estimates that are about to be presented in the coming year may have to be implemented by heavy Supplementary Estimates. I submit that many of these charges could have been foreseen by the War Office a year ago. Take the item of £2,800,000 paid to the Government of India in respect of Indian troops. Could not that have been foreseen? The Secretary of State for War, with the confidence which never fails him, stated that the Estimates in the coming year would not show any large Supplementary Estimates. The presentation of this Bill, I suggest, shows that the Estimates for the coming year will be followed by heavy Supplementary Estimates in 12 months' time.
Take the heavy item, £3,500,000, the cost of reconditioning ships. It may be that all the items could not have been foreseen, but of this large figure the major portion which was bound to arise could have been foreseen by the War Office 12 months ago. Can we, therefore, take it that the Estimates which the Government will present in the coming year will not be supplemented by heavy Supplementary Estimates in the course of the next 12 months? This Supplementary Estimate increases the cost of the Army and Air Force to a sum of about £130,000,000 for the present year. It is necessary in examining this Estimate to have regard to the cost of the Air Force. The Secretary of State for the Colonies yesterday made it quite clear that he had been able to reduce the cost of our land forces in Iraq through the employment of air forces there. Therefore, in reviewing this Supplementary Estimate, it is necessary to have regard not only to the cost of the Army, but to the cost of the Air Force. The hon. and gallant Member rightly said that several items in that figure of £130,000,000 represented War charges which the Government are bound to face, but, on the other hand, the War Office this year are able to draw on large reserves of stores. If, on the one hand, they take credit for the heavy War charges, it is only fair that, on the other hand, we should look at the large sums which the War Office are now saving through the heavy stocks of War stores, of guns and of ammunition. A slight examination of the pre-War Estimates
reveals that fact, and in comparing this with the War Office's pre-War Estimate, we should allow for the fact that if, as in the case of the pre-War Estimate, they were forced to buy in the open market guns, ammunition, stores and the hundred thousand articles which a modern army requires, the Army Estimate this year would be increased by at least £5,000,000 or £8,000,000.

The CHAIRMAN: The discussion must be confined to the causes of the increase and, of course, to any items brought in as Appropriations-in-Aid.

Sir G. COLLINS: As the hon. and gallant Gentleman commented on the heavy terminal War charges, my only object was to make a passing reference—and I will leave it there—to the sums which are not required through the stores left over after the War. This present Supplementary Estimate and the numerous Supplementary Estimates which the Government have presented during the last month, reveal the policy of the Coalition Government. A strong and powerful Government could have withstood sectional pressure from every quarter of the House. They could have withstood pressure from their Army supporters.

The CHAIRMAN: Apparently the hon. Gentleman is developing an argument which should only be taken on the Army Estimates for the year, or perhaps on a Vote on Account for the Army. The present discussion should be confined to certain items as shown in the statement of the Financial Secretary.

Sir G. COLLINS: In the present Estimate there is shown a sum of £2,800,000 in respect of Indian troops employed on Imperial service in the years following the War.

The CHAIRMAN: Quite so, but obviously the question of pressure on the part of supporters of the Government, and the policy of the Government at the present moment, have nothing to do with that.

Sir G. COLLINS: My argument is that if they had withstood pressure, or had adopted an alternative policy, and had not embarked on these wars after the great War, this large sum of money would not be required, and the large sum of £3,500,000 for reconditioning ships would
not have arisen either. In view of your ruling, I will pass from that subject. In the Estimates, however, there are certain sums required for terminable War charges. The House has recently been informed that £32,000,000 has been paid to France for compensation in respect of land, buildings, and other charges. Why that sum should be paid when France is owing this country money is open to question, but I am anxious to know whether there is included in this Estimate any of the sum paid to France for the use of land, buildings, and other charges.

Lieut.-Colonel STANLEY indicated dissent.

Sir G. COLLINS: I notice the Financial Secretary shakes his head. Might I remind him that within the last week the Chancellor of the Exchequer informed the House that £32,000,000 has been paid to France as compensation in this respect, and I ask, is there any sum included in this Estimate for such charges paid to France? The hon. and gallant Member made a passing reference to civil charges in Iraq. He stated that these charges could not have been foreseen when the original Estimate was prepared. I agree that the process of settling these questions in that far distant country makes it difficult to reach quick conclusions, but it would not have been impossible for the War Office, in their original Estimate, to have set aside some sum which was bound to arise in settlements of this kind. I have endeavoured to show, in two or three instances, that the sums in this Estimate, or the larger portion of them, could have been foreseen by the War Office 12 months ago. The Secretary of State for War, as I have already mentioned, argued that the Estimates for the coming year would not be supplemented. If the action of the Government in the past is any guide to its action in the future, the Estimates which they are presenting this year are bound to be supplemented by heavy charges 12 months hence.

Lieut.-Colonel DALRYMPLE WHITE: I am sure we are all obliged for the trouble which the hon. and gallant Gentleman the Financial Secretary has taken in putting these figures before us; but I think most hon. Members will agree that they are extremely difficult to follow, more especially those which are concerned with the Middle East. In regard to the Middle East, a sort of juggling with
figures seems to go on. Sums are transferred from the Army to the Air Force and from the Army to the Colonial Office, and vice versâ, until it is perfectly impossible to find out what is the real total cost involved in that country. As regards the greater part of this sum, the hon. and gallant Member has pointed out that it is due to terminal war charges. Have we yet reached the terminal point of the terminal charges of the War, or are there going to be a great many more Estimates put forward as terminal charges? I agree with the hon. Member for Greenock (Sir G. Collins) with regard to the question of the reconditioning of ships. The great bulk of demobilisation was completed by the end of 1919. There wore a few troops demobilised after that, but I should have thought it would have been possible to foresee what was necessary with regard to the reconditioning of ships without requiring a Supplementary Estimate now. With regard to horses in Iraq, I understood last year that the reduction of horses on a large scale was decided on and that it was necessary to slaughter those horses. I shall be glad if the hon. and gallant Gentleman will inform us later on what horses were sold and what were, slaughtered, in round numbers. I agree also with what the hon. Member for Greenock has just said with regard to the question of the comparative cost of the occupation of Iraq. We were told yesterday with great pride by the Colonial Secretary that so many battalions were being reduced, but we want to know what equivalent number of men of the Royal Air Force have replaced them. All these things, though they may not be strictly in order on this Vote, are very relevant to the discussion, and I hope we shall have any further information we can get from the hon. and gallant Gentleman.

Sir F. BANBURY: I should like to ask one or two questions with regard to the figures which appear here. There is a, statement in the Estimate as follows:
When the original total of Army Estimates, 1921–22, was divided between the War Office and the Colonial Office (Middle East Department) in the Revised Estimate of 30th May, 1921, a sum of £2,224,000, representing savings in the Middle East which were already then in sight, was left unappropriated. This sum is written off from the provision made in the present Estimate.
Then, if you turn to page 4 of the Estimate, under "Head V (b), Middle East,"
there is a saving of £500,000 and there is £500,000 diminished receipts. I therefore presume I am right in thinking those two amounts cancel each other. Then you come, under the heading "Total Estimated Savings, (b), Middle East," to a sum of £1,000,000 saving and £1,000,000 diminished receipts, and there again they cancel each other. The same thing takes place in the next item, and if you add those three items together they make £2,500,000.

Lieut.-Colonel STANLEY: No, no.

Sir F. BANBURY: Yes, they do. £1,000,000 and £1,000,000 make £2,000,000, and £500,000 added makes £2,500,000. At least, that is what it used to be when I was a young man, but perhaps the conditions have changed since then. On page 5 you will see that the sum which was then left unappropriated was £2,224,000. Am I right in thinking that that is a different sum from the £2,500,000 to which I have just alluded? I presume it is. I presume that that has nothing whatever to do with the £2,224,000 which represents "savings in the Middle East which were already then in sight." That was on the 30th May last year, and those savings were left unappropriated. The question I want to ask is this: If those savings were then in sight, why were they left unappropriated and why were they not put in the Estimate of the 30th May, 1921? There is a "further saving of £1,000,000 on the Middle East shown above," and that, again, I do not quite understand. It would rather read, from the fact that a further saving of £1,000,000 is taken, that the £2,224,000 did represent the saving on page 4, but I do not think that can be so, because it will not add up to come out to the right figure. It reads:
The further saving of £1,000,000 on the Middle East shown above is automatically balanced by an equal reduction in the receipt from the Colonial Office, credit for which is included in the £1,124,000 shown on page 32 of the Civil Services Supplementary Estimate of 7th February, 1922.
As far as I can gather from that, what has taken place is that there was a further saving of £1,000,000 on the Middle East and that that has been appropriated by the Colonial Office and put into the Civil Services Supplementary Estimate of 7th February, 1922. That is one of the things which we have always protested
against, namely, that the Treasury should use money belonging to one Department of the State for the expenditure of another Department of the State. I should like my hon. and gallant Friend to tell me what authority there is for allowing a reduction of £1,000,000 on Army Services to be applied to the Colonial Office.

Colonel WEDGWOOD: A new dodge!

Sir F. BANBURY: I am sure my hon. and gallant Friend the Financial Secretary to the War Office would do nothing irregular, but I should like to know for my own information how it is that this sum has been appropriated in this way. The figures on pages 6–8 are very interesting. I gather that they are in the form which was recommended by the Select Committee on National Expenditure some two years ago. The only question on them which I should like to ask arises on page 8, which I gather to be a summary of the whole thing and which puts the receipts (Appropriations-in-Aid) at £36,571,000, leaving a net sum of £93,714,000 required for Army Services. Could the hon. and gallant Gentleman tell me how that £36,571,000 is made up, as it is not at all clear where it comes from, and I should like to know, if possible, where it does come from? With regard to the statement made by the hon. Member for Greenock (Sir G. Collins) as to bad budgetting and his hope that in the future other Supplementary Estimates will not be presented, I have a certain amount of sympathy with that. It is bad budgetting to have Supplementary Estimates, but apparently there have been a considerable number of charges left over from the War which are now being put in and which make it necessary to have these Supplementary Estimates. I should like to ask the Secretary of State for War if this means that all these unforeseen charges arising out of the winding-up of the War are all finished.

The SECRETARY of STATE for WAR (Sir Laming Worthington-Evans): Most of them are finished. There are some more, and I shall have to make provision in my next year's Estimates for some more. I wish they were all finished, because they interfere with the proper comparison of the years.

Sir F. BANBURY: I am not criticising adversely the Vote. I only wanted to know whether these various items had been finished. I can understand the difficulty, after a war lasting four and a half years, in settling all these things. I do not know whether it would have been possible to have done it more quickly, but I hope, at any rate next year, we shall finish, for the reason the Secretary of State for War has said, that it is difficult to arrive at an accurate comparison as to what the real cost of the Army is, if all these various items are put in. I will conclude by saying that it does seem rather a large sum which was originally estimated, and I should have thought that with that large sum it might have been unnecessary to have a Supplementary Estimate, but, with the exception of the £2,224,000, which certainly ought to have been foreseen, I presume it was not possible to foresee those various items. It does seem, however, we have not got much for the money we have spent. I do not in the least grudge money spent on the Army. I am quite willing to provide this additional sum, if it be really necessary, but I do hope, if this sum be passed by the Committee, the War Office will really consider whether or not it is possible to reduce the expense of the Army without diminishing the personnel. I should think something of that sort might be done, and I hope the War Office will consider it.

Colonel WEDGWOOD: Where the right hon. Gentleman the Member for the City of London (Sir F. Banbury) finds it difficult to understand these Supplementary Estimates, I think any other Member of the Committee may be excused if he, too, fails entirely to fathom the finance involved. In the first place, we have to find nearly £10,000,000 extra for the Army Vote. That sum for a Supplementary Estimate is enormous. It is obviously bad budgeting, but I think we ought to emphasise the fact that what is bad budgeting is not always bad business so far as the Department is concerned. The Department put forward Estimates, in the first place, which are so cut as to face the criticism of the public, or of the Geddes Committee, and, having acquired merit and assumed virtue for moderate Estimates they then bring forward Supplementary Estimates amounting to 10 per cent, on the original Estimates. In the old days
before the War, a Supplementary Estimate on this scale would have aroused the country more even than the wonderful telegram from the Viceroy of India yesterday.

Sir F. BANBURY: We had not any Labour party then.

12 N.

Colonel WEDGWOOD: No; but we had the right hon. Baronet the Member for the City of London, and I am not certain that he and the Press, had there been an Estimate such as this before the country, would not have raised opposition in the country, and a protest which would effectually have prevented its repetition. But now, after the War, we accept this quite naturally on a Friday afternoon as being all in the order of events, which one has to expect from this Government, and the Department concerned will naturally, when they are drawing up next year's Estimates, understand quite well that whatever Estimate they put forward will be condoned, however inaccurate, and a Supplementary Estimate at the end of the year of £10,000,000, or, perhaps, next year of £20,000,000, will be accepted by the House of Commons and the country without a murmur. Those of us who want accurate budgeting are right to protest against this large Supplementary Estimate. I will come presently to the savings made that we set off in part against this amount, and show what sort of savings they are. But, in the first place, it is 9¾ millions extra, and, as the right hon. Baronet has said, we get absolutely nothing for it. It has been sent into the bottom of the Atlantic so far as the taxpayer is concerned. They are all charges for wasted money.
Take the first charge under Head 6: £2,800,000 has been paid over to the Indian Government for services rendered by the Indian Government, very largely in Persia. Over and over again, we have attempted to get from the Government some sort of account of what money has been wasted in Persia, because wasted it has been—every penny of it. We have made roads in Persia, including a glorious road from the Baluchistan border up to Meshed. A magnificent road has been made, with rest places at intervals, barracks at intervals, telegraph poles—everything in first-class Indian style. Millions have been spent on it, and we have had to withdraw down the road, and the
natives of the country are using the telegraph wire for hanging out clothes. The whole thing is derelict, and here is part of the bill—£2,800,000. Similar roads have been made all over the south of Persia. It is all very well for the Persians, but where does the British taxpayer come in? Originally it was supposed by the War Office that India would take it lying down, and pay. Observe that it was the Indian soldiers and the Indian administrators who spent the money on these things, but, in the long run, we pay the bill. Could the right hon. Gentleman tell us, before we vote on this Supplementary Estimate, what is the total bill we have had to pay to India for all those more or less civil services rendered by the Indian Army to the Persian Government? I pass from the £800,000 to the next item, all of which has been thrown away, with not one penny of assets to represent the millions there.
The sum of £550,000 has been paid to the Kenya Colony to balance the accounts there. There, too, at the end of the War we had a book charge against the Kenya Colony which the Kenya Colony, of course, could not look at. The total white population of the place is only, I suppose, about 5,000 or 6,000, and they could not possibly meet the expenditure which we have booked up against them in connection with the War. Our War in Kenya and in Tanganyika cost those countries as much as the whole of our campaign in South Africa, 1899–1902, and at the end we have a book debt of about £1,000,000 against Kenya. We have to pay, as usual. There, too, there is not a stick or stone of assets of any value to this country to represent the money that has been spent. A great deal of this £550,000 ought, indeed, legitimately to have been a charge against the Colony. We have very few particulars out of the hon. Gentleman, but I imagine part of this £550,000 is for carrying the troops, stores, etc., up and down the Uganda Railway, and a great deal of it will have been for paying the carrier corps. All this, to my mind, is a charge which might very well have been made against Kenya Colony, because the whole of the profits from the Uganda Railway, which we built with our money, goes to the Kenya Government. Here is the way the profits have been made. The railway takes the profit. Instead of that profit going into
the pockets of the people who advanced the money, it goes into the revenue of the local exchequer. Again, £550,000 with nothing to show for it so far as this country is concerned!
We come next to a payment to the Civil Administration of Iraq in settlement of accounts between military and civil Departments prior to 1st April, 1921—£860,000. There, too, what have we to show for it? This is a charge made by the civil Department against the military. After the War, long after the War, the military administration of Iraq continued. We put in expensive canals, irrigation works, built railways—at one time there were no less than six railways running to Bagdad every one of which had a different gauge. We have developed Iraq in other directions with the British taxpayers' money. Here is a little bit of the Bill. Full details of that Bill, just as in the case of the Persian Bill, will never be known to the taxpayers of this country. You could not extract those details with a corkscrew. We know now that here we are gradually footing the Bill. I submit, in connection with this £860,000, that here we have a ligitimate right to ask the new Government of Iraq that they should recognise, at any rate, that they owe us money for those things. The present Government of Iraq have got the assets of the British Government and we find we are paying for them. It is quite true you cannot expect interest on any money from Iraq at the present time, because we are spending millions still in the country, instead of getting anything out of it; but we have the right to demand that this money should be treated not as a grant, but as a loan, and that when—if ever—Iraq becomes self-supporting, we shall have the chance of reckoning this loan as a debt due to this country upon which ultimately interest might become payable. That is the practice, I may add, in connection with our other Crown Colonies. Whenever Grants-in-Aid are made these Grants-in-Aid are always made as a loan and booked up against the colony. As the colony becomes self-supporting interest upon that loan becomes payable. There, again, we have at the present time another million gone west, represented by nothing on earth—at least, of value to us.

Lieut.-Colonel STANLEY indicated dissent.

Colonel WEDGWOOD: Of great value to the people of Iraq, of course! I note next that the cost of reconditioning ships and other sea transport charges incurred during the period of demobilisation runs to an initial £3,500,000. I do think that is the most perfect example of waste budgeting you could imagine. Look at the particulars. You will see—very wisely—the Government refuse to disclose what was the original Estimate, so that we cannot compare that £3,500,000 error with the original calculation. I should judge probably that the Budget in that connection would probably be the worst thing disclosed by any of these Supplementary Estimates. Hon. Members will observe that this was two years at least after the commencement, so that there was opportunity to form a correct judgment on the point. Having gone all through the list of these expenditures we find there is nearly £10,000,000 in money spent in excess of the original Estimate for which the British taxpayers have nothing to show. Then the War Office suggest that there are savings to balance this £10,000,000 additional expense. They are saving an amount almost equal to half of the £10,000,000, but what are their savings? It is so like the War Office.
They have saved on the Territorial Army, and they take great credit for it. They brought before this House 18 months ago a great scheme for a new Territorial Army. It was, if I remember rightly, loudly lauded and praised by hon. Members below the Gangway. This Army was to take the place of the old Territorial Army. We were going to have our second line of defence in it. I need scarcely tell the Committee that the Territorial Army was never very popular with the War Office. It was never very popular with the Regular Army. It is a rival show. It is hardly necessary to point out that it is upon the Territorial Army that the savings have been made. We have not got the Territorial Army, and therefore we have not spent the money, and the hon. and gallant Gentleman opposite—quite rightly—is rather proud of the fact. But they have not spent the money on the Territorial Army. I rather wish that we had the original plan of our Territorial Army and what the War Office expected to get. After
all, if you draw up a thing on a scale and plan for a Territorial Army on a thoroughly generous scale, with a number of major-generals in charge of each district, each with a proportionate staff, you are going to get an expensive machine—without the rank-and-file. That is what we have got at the present time. It would be far better if the Territorial Army were to be built up on a more moderate scale so that the permanent, or what I should call overhead, charges for our defence were less and more proportioned to the actual amount of defence we got from the Territorial Army.
What I state about the savings on the Territorial Army apply equally well to the Militia, and the Army Reserves. Here, too, substantial savings have been made because they have not got the cadres filled which they arranged for when the original plan was made. The savings to-day are made—quite rightly—but very unfortunately for the War Office. It is the same with the expenditure on warlike stores and buildings, and when the Estimates are introduced for new buildings we are told the money is absolutely vital to the safety of the country. When the War Office approach the Treasury with their Estimates, they have convincing arguments that every new building must be put up, but as a matter of fact the money voted for new buildings and stores forms a convenient reserve to draw upon. Really you do not spend the money, but when you exceed your Estimates in other directions, you use this money as a reserve as though it were Excess Profits Duty, and in this way the Department manages to carry on. So far as the last paragraph in the Estimate is concerned, I doubt whether any hon. Member can gather the faintest glimmer of an idea of what it all means. Apparently you have got a juggling of administration going on between the War Office and the Colonial Office. Yesterday the Colonial Secretary said: "I have saved £5,000,000 in 1921–22 on the Middle East." May I point out that he done so by passing on the expenditure to the other Department? It is like the old Liberator Society, when they used to lend money to each other just before the balance sheet was drawn up. As far as I can understand this Estimate, there has been some such juggling between the Colonial Office and
the War Office so as to make both Departments look all right.
I would not like to examine this Estimate like the Official Receiver would, but do let us have our Estimates clear in future, whether for the Middle East or the Army Estimates, and avoid these Supplementary Estimates which are almost indistinguishable from completely new Estimates and which, whether intentional or not, befog Members of Parliament as to the moaning of the expenditure which has been incurred. Apparently we are taking credit to ourselves for the sales of horses and issues of stores on repayment. We are told that some of these horses were sold in Constantinople, and I would like to ask if stores have also been sold there.

Lieut.-Colonel STANLEY: Not in Constantinople, but in India.

Colonel WEDGWOOD: If it is only in India, that is all right. I only wanted to make sure that we were not selling our stores to anybody who could use them against us.

Sir F. BANBURY: How about Ireland?

Colonel WEDGWOOD: That will come in next year's Supplementary Estimates, and they are not an asset at all. I would like to ask when was the last money paid to France? We have heard that £32,000,000 had to be paid to France for trenches, and land, and other services rendered to us during the War. It is perfectly well known to every Member of this Committee that France owes us £600,000,000 with accruing interest. I want to know when we ceased paying money over to France in view of the fact that France owes us this very large sum of money. We know that recurrent expenditure is not being paid over, but is being set off against the French debt to us. When did we say that France could use this as an off-set and not pay us in cash? Obviously in this matter we are not treating the British taxpayer fairly if we are paying over to one of our debtors large sums of the taxaypers' money. When was the new policy of not paying the cash finally adopted? The whole of this £10,000,000 is money which has been absolutely thrown away, and a large part of this expenditure is due to the Curzon policy of the Indianisation of Iraq.

Major GLYN: There is an item in this Estimate of £3,500,000 for the reconditioning of ships as a result of the War. That raises the question as to whether the War Office ought to take over this item, because it is not a War Office charge, but should come under the Ministry of Shipping. The effect of placing £3,000,000 on this Vote for such purposes leaves the public to assume that this money has been spent upon the Army. As a matter of fact, this sum has been pushed into the War Office Estimates and it is unfair to accuse the War Office of bad budgetting when this amount was thrown upon them at the last moment. As the Ministry of Shipping has come to an end, it would be interesting if the Financial Secretary to the War Office would tell us whether the new Transport Department is to be continued under the Admiralty, and what is to become of the Ministry of Shipping as a department of the Board of Trade. At the present time there is a shipping department under the Board of Trade and a transport department under the Admiralty, and unless we are careful we shall find the War Office lumbered up with Estimates from the Board of Trade and the Admiralty. It is difficult to follow the Army Estimates unless we can see exactly how the money has been spent. Hon. Members have stated that in regard to Iraq there is juggling going on between the Colonial Office and the War Office in regard to expenses of administration. No doubt when the Air Estimates are introduced, the Minister in charge will put forward a strong case for the air service experiment in Iraq. Whilst we are maintaining troops there, the Air Ministry is assuming functions which are not concerned with the air. They are gradually becoming the possessors of armoured cars and tanks.

The CHAIRMAN: The hon. and gallant Gentleman is not in order in dealing with those matters on this Estimate, because they will come on the Estimates for next year.

Major GLYN: Just as there has been juggling between the War Office and the Colonial Office, we want to secure Army efficiency and be able to show the country that the money is being spent upon efficiency, and not upon administrative charges which are the special concern of various other Departments. Some of us
believe that the times are so serious that it is absolutely essential the country should understand what risks we are running, and that every penny that is saved should be saved, but that the sacrifice should not fall on fighting efficiency. There should be in every direction, both as regards these shipping charges and other charges, an honest attempt made by the Government to carry out reductions in expenditure without losing fighting efficiency. That can be done only by the fighting services consulting together, and, where the Colonial Office desire to have the support of the fighting services, the accounts should be so clearly drawn as to make the differences between the one and the other perfectly obvious to the public. I do not for one moment believe that the Labour party want to see this country sacrificing its responsibilities; they wish to see real economy.

The CHAIRMAN: The hon. and gallant Member is going a great deal further than he is entitled on this Vote. The discussion must be confined to the items in the Vote or perhaps the form of the accounts.

Major GLYN: I will not pursue that matter any further. All I will say is that it appears from this Estimate that there is a very large sum for Army expenditure which some of us feel should be shown on other Votes.

Mr. G. LOCKER-LAMPSON: I believe that the day is fast approaching when this House is going to take a firm stand on the way in which the Estimates are presented. I should like to support my hon. and gallant Friend the Member for Newcastle-under-Lyme (Colonel Wedgwood) and my hon. Friend the Member for Southport (Lieut.-Colonel White) in saying that these Estimates are practically incomprehensible. I have spent one hour this morning trying to understand them. It may be that I am incapable of understanding them, but I am fortified in what I am saying by the fact that the right hon. Gentleman the Member for the City of London (Sir F. Banbury), who everybody will agree does understand finance, cannot understand these Estimates. It is perfectly ludicrous that we should have Estimates presented to us that not one Member in a hundred can understand. If you cannot understand the Estimates, how are you to form an opinion as to whether they are sound or
not? These Estimates, I understand, are presented in a new form recommended by a Committee of which my right hon. Friend the Member of the City of London was chairman.

Sir F. BANBURY: No, Sir Herbert Samuel was chairman.

Mr. LOCKER-LAMPS0N: It was recommended by the Committee which sat on this question. The Government accepted that recommendation, and we were told that in future it would be perfectly easy to understand the Army accounts. Unfortunately, we have now got a quantity of cross-accounting, and, in order to try and understand the Estimates, we have to take, the original Estimate, the Supplementary Estimate, the original Estimate for the Middle Eastern Services, the Supplementary Estimate for the Middle Eastern Services, and the Air Estimate, and we have to read and compare and follow all the cross-accountancy work of all these various Departments. I venture to say it is absolutely impossible to understand the Estimates presented to us to-day, and until the House insists upon having Estimates presented in a comprehensible form, we are merely wasting our time in discussing them. I entirely fail to understand to what this £2,224,000 refers. Apparently, that sum has been saved on the Middle Eastern Estimates. I have been looking into it, and a large part has not been saved on the Middle Eastern Services at all. I am sure that my hon. and gallant Friend did the best that any human being could do with the material in these Estimates to explain them to the House. We have an increase of £650,000 on the maintenance of the standing Army. Yesterday, or the day before, the Colonial Secretary took credit for saving £1,137,000 by the acceleration of the withdrawal of troops from Iraq. If you add up the extra expenditure necessitated by this acceleration of the withdrawal of the troops from Iraq, in paying the Air Ministry £200,000 for Iraq, and in the maintenance of the native levies, both consequent on that acceleration of withdrawal, and the £650,000 increased expenditure on the standing Army, you get the exact figure of the saving on the Middle East, or all but £13,000. I read it in that way, and I should like to ask if I am right. We are not really saving at all. Apparently, the
War Office is taking on the whole of this expense of these men whom you have been employing in Iraq. I do not see that they are saving the very much larger part of this £2,224,000 on the Middle East. It is purely a transfer of expenditure from one Department to another.

Lieut.-Commander KENWORTHY: I should like, first of all, to congratulate my hon. and gallant Friend the Member for Newcastle-under-Lyme (Colonel Wedgwood) on his three or four very excellent speeches in succession this week. They have given me more delight than the speeches he used to deliver from the corner seat which I now occupy. I wish to say a word of criticism as to the atmosphere where the hon. and gallant Member imports into this Debate when he explains the sum that are being spent and the savings that have been made. It is not peculiar to him. Again and again, we have been told from the Treasury Bench that we have saved so many millions, and then the Government seem to take that as an authorisation at once to spend that money in some other direction. These savings ought to have been made in any case and until the Departments realise that they must be absolute savings and must not be taken as any condonation of any expenditure in any other directions, we shall never get our finances in order. Again and again we have demands from the Colonial Office and the Admiralty for expenditure which is supported on the ground that great savings have been made in other directions, and we are asked without any shame whatever to vote these vast sums in spite of the present financial stringency.
I rose to ask two questions with regard to the extra expenditure on the maintenance of the standing Army at home. When the original Estimates were prepared I believe the War Office did not allow for any receipts in cash, and properly so, from the German Government, but since then considerable sums have been received, and I want to know where these amounts figure in the Estimates. Further, I would like to be informed if we are to count on them in the future, or what is the position. I believe the facts as disclosed by the Treasury are that the money received from Germany in reparations, whether it includes ships, dyestuffs, potash or cash payments, does not even I pay the cost of the Army of Occupation
on the Rhine. What has the War Office to say as to their part of the bargain? Can they hold out any hope in the future in this respect? I would remind the Committee that the Army on the Rhine to-day has been very much reduced, and that most of the fighting troops are at the other end of Germany—in Upper Silesia, and the Army on the Rhine has been practically reduced to the accountants staff, clerks and general staff. As a fighting force it hardy exists as an organisation. It is a skeleton force. We ought to have some explanation from the War Office before we vote this vast sum. We ought to be told what is the exact position with regard to the cash payments for this Army and are the extra charges which we are required to meet on the standing Army at home in any way accounted for by having to transport troops from the Rhine to Upper Silesia? Also we should like to be informed what prospect there is of getting these troops away. Our troops are very popular there with the inhabitants. I happen to be in close touch with that part of the world. I was there last year. Still, both the Germans and the Poles say that that part of the world will settle down much more quickly when the Allied troops are withdrawn. But troops of another Power make trouble. So long as they remain there, there will be friction and all the elements of disturbance and uncertainty.

The CHAIRMAN: The hon. and gallant Member is getting far from the mere item of the cost of these troops.

Lieut.-Commander KENWORTHY: If there is any extra charge due to these troops, I hope that the Minister for War in the Cabinet Council will press for their early withdrawal for the reasons I have given, although, perhaps, I was not quite in order in giving them. I shall support the Motion for reduction. I do not think that any hon. Member has any right, in the present financial state of the country, to vote for this very heavy Supplementary Estimate without further explanation.

Captain COOTE: If any part of this money be attributable to expenditure in Persia, I fully agree with the hon. and gallant Member the chief of the capitalist section of the Labour party, the hon. and gallant Member for Newcastle-under-
Lyme (Colonel Wedgwood), that it ought to be repudiated, and I shall vote against it if only as a protest against the action of the Noble Lord the Foreign Secretary in that part of the world. I want to ask a simple question. How much of the money we were told yesterday we had saved are we told to-day we must pay? I do not quite agree with the hon. and gallant Member for Wood Green (Mr. G. Locker-Lampson) in thinking that this money which is being saved on the Middle East Estimate is or could be an absolute saving. Obviously the troops withdrawn from that part of the world must have money expended on their upkeep by the War Office until they can be finally dispensed with. The Colonial Secretary was quite right yesterday in saying that from his point of view there was a saving, but I want to be informed how much of that saving is to fall upon the War Department and when these charges, which are in some degree terminable charges, will cease. The Secretary of State for War, in reply to the right hon. Baronet the Member for the City of London (Sir F. Banbury) said there were further terminable charges which would come in course of payment, and I would like to know if we can have any information as to the total of those charges, so that the Committee may be enabled to form a far better idea of what will be the net cost of the Army both this year and in the year to come. I agree it is quite impossible at present to disentangle the truth from the Estimates presented to us.
I do not think that the. Financial Secretary to the War Office was any too explicit in what he said with regard to the Territorial Army. Anyone who knows the condition of this portion of the Army must be aware that officers commanding the Territorial Army are continually asking the War Office to sanction expenditure which they consider necessary to make the force a success, and that the War Office has been unwilling to sanction expenditure which, in many cases, appears to be very badly needed. I should like to ask the right hon. Gentleman what he proposes to do in the future with regard to this force, which, in view of the reductions which have been made in the Army, has now become our first rather than our second line of defence.

The CHAIRMAN: That is going very far from the particular saving on the Territorial Army.

Captain COOTE: I was wondering how far the saving represented a cutting down of the activities of the Territorial Army—activities which would enable it to become the force we all desire it should be. With regard to the form of these Estimates, I have already asked one or two questions which I hope will, if they are answered, enable the Committee to arrive at the truth as to the sum which we are asked to vote. I understand that the Estimates are prepared in accordance with the recommendations of the Committee on Public Expenditure. Although I have never been very much at mathematics it seems to me improper that Members of this House when they are presented with Supplementary Estimates should have to hunt through back folios of the Estimates for months and months, before they can arrive at any true appreciation of the amount they are asked to vote. We hear frequent complaints of legislation by reference, but I think that budgetting by reference is just as bad as legislation by reference, and I hope it may be possible to give us some assurance that the Government will not persist in presenting Estimates in this form.

Sir DONALD MACLEAN: The hon. Member for Wood Green (Mr. G. LockerLampson) stated, with a large degree of confidence, that not one man in 100 in the House of Commons understood these Estimates. I am one of the 99. I have had, like my right hon. Friend the Member for the City of London (Sir F. Banbury), some exceptional opportunities of studying Estimates, but I quite fail to follow some of the main figures here. To show how misleading this Estimate is to an ordinary Member of the House—I do not say it is intentionally misleading; I do not suggest that at all—I would ask hon. Members to look at page 4, where they will see that column 2 is headed "Diminished Receipts." There is, however, an asterisk, and if hon. Members follow the asterisk, they will see that what is really meant is that the figures in question represent increased receipts. That is a classic example of saying what you do not mean.

Sir L. WORTHINGTON-EVANS: That is the common form.

Sir D. MACLEAN: It may be the common form—

Mr. MARRIOTT: Common intelligence—.

Sir D. MACLEAN: Not the common intelligence of ordinary Members of the House. I say that Estimates presented by the Executive should be presented in such a way that they can be understood by the ordinary reasonably intelligent Member, and not in such a way that they can only be understood by a chartered accountant. It should be remembered that the duties thrown upon Members of the House of Commons who have to follow these Estimates are very heavy. This Estimate has been in the hands of hon. Members for two or three days, but so far as I am concerned, I have had no time at all to look at this Paper until this morning, and I have found the very greatest difficulty in steering my way through its rocks and shoals. Such an Estimate as this should be made as clear and as simple -as possible. What is the real reason why hon. Members find this matter so difficult? It is the recurrence throughout almost every item of the words "Excluding Middle East." I am not going into any detail at all as to that. I only want just in this way to point out to the Committee that, under the new system, which has been set up in this financial year, of giving to the Colonial Office an army of its own, the regular Army Estimates never will be intelligible to the ordinary Member of the House. I protested against it at the time, and every month of experience shows how complicated, how unnecessary, and, as I believe, how uneconomical it is. The proper system, of course, would be that, where you are dealing with a war force, it should be under the War Office. An hon. Member refers to the Air Force. I have a very open mind as to whether it is necessary to have a separate Air Force at all, and I reserve my opinion as to that. It is obviously clear, taking this Estimate right through, that the main cause of the difficulty is this army within an army. The whole of the forces of the War Office should be under the supreme control of the War Office. I pass from that for the moment to examine one or two other points in the Estimate itself. The first point that I would make is with regard to the reference, on page 5, to "other terminal charges of the War." I take it that that includes payments to France, or some portion of them, and I want to emphasise once again what has been said as to the injustice to the
taxpayers of this country of paying large sums to France when France owes us much greater sums herself.

Sir L. WORTHINGTON-EVANS: Perhaps it may be convenient if I tell the Committee what is being done with regard to that. These payments are not cash payments to France. They are part of the general settlement which the Treasury has made, and the Treasury has apportioned to the Departments the sums which are appropriate to the accounts of those Departments. Hence we have in this Supplementary Estimate for the War Office the War Office share of the general settlement. It does not, however, represent a cash payment by the War Office to France.

Sir D. MACLEAN: Not by the War Office.

Sir L. WORTHINGTON-EVANS: Nor by the Treasury. It is in account.

Sir D. MACLEAN: I am certain that a careful study of the OFFICIAL REPORT on Monday will enable me to follow more clearly than I can at present what the right hon. Gentleman has said, but it only shows the great difficulties under which the Committee is labouring in these very complicated matters, and it does add point to the argument which we are pressing upon the Government on the matter generally. I think I have some glimmering, as my right hon. Friend the Member for Paisley (Mr. Asquith) said, of the meaning, and I will pass from that point.
The Estimate as a whole shows once again how bad the budgeting has been. It must have been perfectly obvious, when these Army Estimates were framed for 1921-22, that the political position, and indeed the war position, which the War Office had to have in mind, was such as would give rise to other charges than were then reduced to figures in the Estimate. When the revised Estimate was being presented, I remarked that there was in that revised Estimate, comparing like with like, only a saving of about £2,000,000, and I added that that was without taking into account the other charges which must fall upon the country in view of the then fairly obvious position. After all, this Committee is the responsible body. It is the duty of the Executive to submit these Estimates to this Com
mittee, and we have to be responsible to the country for approving or disapproving of this Supplementary Estimate. The whole of the arguments and the statements. which have been made by hon. Members show that in truth and in fact the real sum which has been asked for is very little short of £9,000,000, and not the Estimate of £4,900,000. That is a real thing which hon. Members and the country have to face. Let me draw the attention of hon. Members to one of the sentences in the last paragraph of the Supplementary Estimate. I will read it to the Committee:
 The further saving of £1,000,000 on the Middle East shown above is automatically balanced by an equal reduction in the receipt from the Colonial Office, credit for which is included in the £1,124,000 shown on page 32 of:the Civil Services Supplementary Estimate of 7th February, 1922.
So it is not a real saving at all. The estimated reduction in the receipt from the Coloniel Office has not been realised.

Lieut. - Colonel STANLEY: indicated dissent.

Sir D. MACLEAN: I may be wrong, but that is how I read it, and it gives point to what other hon. Members have said that, puzzling as is this Estimate, the last paragraph is one of the greatest word puzzles of all. I think one ought really to read the beginning-
 When the original total of Army Estimates, 1921–22, was divided between the War Office and the Colonial Office (Middle East Department) in the Revised Estimate of 30th May, 1921, a sum of £2,224,000, representing savings in the Middle East which were already then in sight, was left unappropriated. This sum is written off from the provision made in the present Estimate.
This comes before the sentence which I have already read. It is quite impossible for any hon. Memberand when I say that I mean the ordinary Member of this House who has not had special opportunity of examining these details-to understand the Estimate. The position ought to be stated in ordinary simple language and the preceding part of the Estimate should have made it, quite simple for the ordinary Member to understand what the War Office really means by it. I do not associate myself at all with the suggestion that this Estimate is intentionally misleading. I do not say that for a moment. The officials tried to draw up these Estimates in accordance with the instructions given them. Great questions of
policy lie behind these matters, and the policy is one of mixing up the war operations in the Middle East with the Colonial Office instead of these war operations being solely in the hands of the War Office as they used to be. If they were solely in the hands of the War Office we should know where we were, and until hon. Members take into their own hands the responsibility of these matters, this sort of thing will go on. My hon. Friend the Member for Wood Green (Mr. G. Locker-Lampson) said it was quite time that something was done. How is it going to be done? It will not be done by more speeches here. The only shock which the Committee can administer to the Government and which will bring them sharply up against this question is the shock of the Division Lobby. That is the only way to do it. We all know that perfectly well, and it really means how many Members who have heard this Debate are prepared to back their opinions by their votes? The only way in which the opinion of the House of Commons can be brought to bear with any real force upon the Government in regard to the thoroughly well denned plans which have been put before the War Minister and his assistant this morning is by hon. Members backing their opinions by their votes in the Lobby.

1.0 P.M.

Captain Viscount CURZON: I have listened to the whole of this Debate and to my hon. and gallant Friend (Lieut.-Colonel Stanley), who introduced the Supplementary Estimate. I have tried as hard as I can to understand his speech, and I have tried still harder to understand the figures which have been presented to us. Of all those who have spoken so far not a single one has got up and said that he could understand these figures which have been presented to him. I am in exactly the same position. It seems to me that no less than five Departments at least are concerned in these figures—the Ministry of Shipping in connection with the requisitioning of ships; the Colonial Office in respect of the Middle East; the Air Ministry also seems to come in in an indirect way; the India Office also seems to come in; and the Army comes into the Estimates as well, and how exactly the responsibility for the expenditure is to be apportioned between these various Departments I cannot for the life of me understand!
There is one thing I would like to ask the Government: Can they give some indication that in the future they will try and make these accounts a little more intelligible, and particularly in respect of the Middle East?
I understand from the Financial Secretary to the War Office that one reason that the extra expenditure has been required by the Army is in respect to Ireland. I would like to know how much of this extra expenditure has been incurred in respect to Ireland. The hon. and gallant Member mentioned Ireland in the course of his opening remarks, and he did not give us the least idea of how much extra expenditure is involved in connection with Ireland in this Estimate, and how it arises. I would like to ask him also another question in respect to Ireland. Is there any credit shown in these Estimates for any stores sold to the Provisional Government or otherwise disposed of in Ireland, and if so, where is it and how much? I shall be very glad if the hon. and gallant Member would tell us that. It is possible that no provision has been made in these Estimates for that, in which case I presume that it will be shown on the Estimates for next year. The hon. and gallant Member took credit for a certain saving in respect of the Territorial Army and also in respect of the Militia. That gives me very great anxiety indeed. It seems to me that our Regular Army to-day is undergoing a process of reduction. It is not in any way as big as it was, and I would like to know what is the strength of the Territorial Army at the present moment. I understand, so far as I can make it out, that we have got practically no second line of defence, and I would like an answer to my question before the Army Estimates for the ensuing year are introduced, so that we may get some idea of what our second line resources really are. I hope that the hon. and gallant Member will be able to give us an assurance that any similar amounts in future will be presented in a form which will be easily intelligible to the ordinary person like myself, who has not got time to go through all the various Estimates on the Paper.

Captain ELLIOT: I wish to ask one question in connection with the answer just given by the Minister for War in relation to this payment made to France
in connection with the clearing up of accounts at the end of the War. I understood him to say that this was neither money paid by the War Office to France nor yet money paid by the Treasury to France. Has any money passed from our Government to the French Government in connection with this sum of £30,000,000 or £40,000,000, and, if not, what becomes of his argument that the money had not actually passed? I think it is a matter of some importance.

Sir L. WORTHINGTON-EVANS: If the hon. and gallant Gentleman thought I was referring to the £30,000,000 or £40,000,000, it should be cleared up at once. I was merely referring to the charges with regard to the French railways which are in this Supplementary Estimate. I was not referring to anything that is not in this Supplementary Estimate. I was asked whether that was a payment in cash. It was not a payment made by the War Office in cash at all, but it was part of a general settlement come to by the Treasury and the Treasury debited our Vote with the proportion that ought to be carried on our Vote. That is all I was referring to.

Captain ELLIOT: It is perfectly obvious that it is really a debating point which is scarcely, I think, worthy of one of His Majesty's Principal Secretaries of State.

Sir L. WORTHINGTON-EVANS: I was answering a question. I did not want to make a point.

Captain ELLIOT: To answer the question in such a way as to give the impression that the money had not actually passed, seems to me rather unworthy of a Minister. The money has been spent, it is being paid by this country to France, and there is no doubt at all that it is considerably resented throughout the country that we should pay away our money to the extent of £30,000,000 or £40,000,000, or such portion of it as is represented in this Vote, without getting any account of the huge sum which the French owe to us.

Sir L. WORTHINGTON-EVANS: I said this was not a cash payment either by the War Office or by the Treasury, and that is actually and absolutely true. It is not fair to represent that we are
paying France cash, when France owes us a lot of money which we are not setting off against it. This, on the contrary, has been a matter settled by the Treasury in account with France, and not representing a payment by us to France.

Captain ELLIOT: It is a point of some importance. I am sorry to stress the matter, but we have similar large accounts in this very Supplementary Estimate with regard to payments made by the United States to us. Do we understand that these are all entirely illusory sums, and that the United States is not actually turning over the money to us, but is merely crediting us with a certain amount of drawback against the huge sums that we owe America? It may, strictly, not come within order on this Vote, and we cannot pursue the matter further. But if this is an illusory sum, these sums in this same Estimate, amounting in some cases to very large sums, in one case to £9,000,000—we charged the Americans for admission fee to the War between £5 and £10 per head for every American soldier that came over here—that is an illusory sum also.

The DEPUTY-CHAIRMAN (Sir E. Cornwall): There is nothing here about the United States.

Major-General SEELY: While I agree with my right hon. Friend the Member for Peebles (Sir D. Maclean) that the form in which these Estimates are presented is most confusing, and while I agree, with some knowledge of the preparation of Estimates, that it really is intolerable that we should have a column called "Diminished Receipts," of which one half is described by asterisks as "Increased Receipts," thus adding to a confusion which is almost unparalleled even in the confused statements that come before us, I differ profoundly from him as to the main reason for the confusion and for the lack of economy, to use his own words. He implied that the real reason, both for the confusion and for the asking of so large a sum, as this, was the mixing up of the Middle East with the War Office. He said we should never get true economy until the War Office took over the whole business so far as anything connected with warfare was concerned. Here we have a clear issue. In the course of this Debate we have seen how necessary it
is to differentiate between real and apparent savings. The hon. Member for Wood Green (Mr. G. Looker-Lampson) asked various questions about some of the savings—savings due to the earlier withdrawal of troops from Iraq. Of course that is not a real saving to the taxpayer except in a very small degree. In fact, it may be no saving at all, for what you really eave is the difference in cost between a soldier in Iraq and the cost of a soldier either at home or at the other station to which he is moved, and against that you have to set off in this case, of course, the extra cost of the gendarmerie which you raise, so that in that case, if the troops that left Iraq went to another station where it was as expensive to keep them—and of those there are several—far from being a saving to the taxpayer, although it appears on one or the other Estimate as a real saving, it is actually an added cost. But we are in sight in these Supplementary Estimates apparently not of an apparent saving, merely a transfer from one Department to another, but of a real saving to the taxpayer. If the Middle East plan which my right hon. Friend challenges is carried through, if the thing he objects to in these Estimates, the confusion of war Estimates between the War Office and another Department, is carried through, we may get a real saving, and an immense saving. It would not be right to go in any detail into the matter now, but it is very germane to this discussion. If the claim made by those who believe that the substitution of air power for land power makes a saving, the saving is not a small thing such as we see here of £500,000, but of an immense number of millions, and it would be a pity if we were to attempt to mix up a demand for economy and a protest, which I think is well justified, against the form of the Estimates here, with a refusal to consider, and indeed a denunciation of what is, I believe, the only chance we have of making a real saving in our defensive arrangements without closing our Empire.

Sir F. BANBURY: It is confusing that in the second column, on page 4, headed "Diminished Receipts," we find not diminished, but increased receipts. A very simple way of avoiding that difficulty would be to have four columns instead of three. One would be savings, the second
would be diminished receipts, the third increased receipts, and the fourth debt. Then you would be able to understand exactly what has taken place. The total estimated expenditure abroad, excluding the Middle East, is £9,534,000. That is practically the sum for which we are asked in this Supplementary Estimate.
On page 4, Item (B), for the Middle East there is a figure of £2,000,000, but this £2,000,000 is really £1,000,000. That means that the Supplementary Estimate should have been £8,534,000. The £9,534,000 is arrived at because this £1,000,000 which was saved by the War Office has been presented to the Colonial Office, and the Colonial Office has made a saving on that. The hon. Member for Wood Green (Mr. G. Locker-Lampson) has shown me the Colonial Office Supplementary Estimates, in which £1,124,000 figures as a saving. That is made up of the £1,000,000 to which I have just referred and £124,000 taken from somewhere, it may have been from some other Department. It is very hard on those of us who wish to see an efficient Army to be asked for a supplementary sum of £9,500,000, when the real Supplementary Estimate is only £8,500,000, in order that the Colonial Office may be able to say they have made a saving. I hope that the War Office will not indulge in the future in such good feeling as to give the Colonial Office money which they ought to have kept for themselves. It is bad budgeting, it deceives the House of Commons and it is not a right and proper thing to do. Each Department should be responsible for its own Estimates. I agree with what has been said by the right hon. Gentleman the Member for Peebles (Sir D. Maclean) in regard to muddling up the various Departments. If we do muddle up the various Departments, surely the Minister who receives a present from another Department ought not to claim it as a saving by his Department.

Mr. MOSLEY: The mysteries of this Supplementary Estimate have baffled the most competent authorities in this House, and I certainly am not qualified further to elucidate them. Certain broad facts have emerged in the discussion of this Supplementary Estimate which are of peculiar interest. We have discovered that an extra expenditure, amounting to nearly £10,000,000 is asked for, comprised largely of balances falling due for the wars after the War. There is one large item
which does not fall within this category, namely, the reconditioning of ships, upon which I should like to ask one question. We find that in the original Estimate £834,000 was allowed for this item, and now in a Supplementary Estimate we are asked for £3,500,000 extra. That is a point on which I want to be assured. So far as I can make out, in the original Estimate £834,000 was asked for under this heading. I shall be very grateful to the hon. Gentleman if he could say whether that is correct. Obviously if I am correct the figure is of a very startling character.
Apart from this very large sum of £3,500,000 for the reconditioning of ships, nearly all these charges are bills incurred in the wars after the War in which the Government has involved this country throughout the world. We find a large sum for Indian troops who were presumably employed in Persia. We are told that they were employed on military services in the years following the War. We find another large sum in settlement of accounts between the military and civil authorities in Iraq. The great bulk of this additional expenditure is due to various military commitments and adventures in which this Government has involved the country after the conclusion of the Great War. We find that savings have been effected in two main categories—the building services and in the Territorial Army. It is interesting to note, as was pointed out by the hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood), how speedily when economy becomes a necessity the Government is able to economise in those building services which on former occasions we were told were so entirely imperative to the proper maintenance of the troops.
The real lesson and the veal moral of this Supplementary Estimate can be drawn by the comparison between the saving effected on the Territorial Force and the extra expenditure required to pay for adventures in Persia and Iraq. That is the real lesson and the real moral which we may draw from the blunders of this Government for the future guidance of statesmen in this country. We are here presented with a bill for military adventures which have led to nothing, and which in the case of Persia has been abandoned without the achievement of a
single one of the objects which it set out to secure. We are faced with additional expenditure for waste in purely military adventures of that kind, and to meet that additional expenditure we are asked to effect savings on the Territorial Army, which is the vital arm upon which we rely for the defence of this country and to safeguard us from invasion in time of war. That is where our militarists have led us. That is the achievement of the militarist policy, stedfastly pursued throughout past years. We have to pay for blunders, for failures in all the four quarters of the globe, by sacrificing our first line of defence for our own shores. The militarist policy, pursued as it has been pursued by this Government, results in jeopardising our fundamental safety, the first vital line of defence of our own shores.
The Government in the policy they have pursued have violated every standard not only of wise Imperial policy, but even of military strategy. They have cast aside as lightly to be disregarded, the maxim of every man successful in war from the Roman Emperors downwards, of men who, even in the days when Imperial aggrandisement was the sole actuating motive of statesmanship, laid down the sound maxim that in time of military stress and danger, when a great Empire or country had been emaciated by long-sustained war, it was right and proper to withdraw from outlying and exposed commitments and to consolidate on the defence of those vital portions of that country's territory which it was desired above all to preserve intact. The Government by their policy have scattered our resources in Iraq, in Persia, and in other adventures which in every case have been unsuccessful, and as a result they are now taking the very gravest risks in cutting down the Territorial Army on which we rely in the first instance for the defence of our own shores. That is where the militarists have brought us, and from that we may draw some lesson for the future.

Lord ROBERT CECIL: At the beginning of the explanation on the Paper it states:
The increase under Head t, Maintenance of Troops at Home, is practically balanced by the similar reduction in the Middle East.
I may have misunderstood that father cryptic utterance, but I take it to mean
that if you turn to the previous page you find under Head 1 £650,000 asked for as an addition to the Estimate. Then, when you come to the estimated savings you find a saving on the Middle East of £500,000. I take it that that is what is meant by "practically balanced," but in the next column you find £500,000 as a diminished receipt. I have not the least idea of what that means; I daresay that that is my ignorance, but I should be glad to know where these receipts come from? That is an elementary question the answer to which, no doubt, I ought to know. I presume that it means that some receipt is £500,000 less than it should have been.

Sir L.WORTHINGTON-EVANS: From the Colonial Office.

Lord R. CECIL: That seems to wipe out the saving, and therefore I do not understand how the increase of £650,000 is practically balanced by the Middle East reduction. It appears to me to be the reverse and that the £500,000 saving is practically balanced by the loss of £500,000 and that, having been lost, that money cannot be used again to balance the £650,000 extra expenditure. These items of increased receipts and diminished receipts are very confusing as printed here. They are more confusing on the next page, where the diminished receipts seem to have disappeared and the £500,000 is boldly asserted to be a saving. I daresay that it is all very good accounting and is in accordance with the best official practice, but it is very hard for an unfortunate Member of this House to know where he is.

Mr. S. WALSH: On the first page we have "Maintenance of Troops at Home and Abroad" £650,000, and on the next page "Maintenance of Troops at Home." How much is due to maintenance at home, and how much to maintenance abroad, because the two items will not agree.

Lieut.-Colonel STANLEY: I must first of all apologise to the Committee because every Member who has spoken has said that the accounts are so unintelligible that nobody can understand them and that my explanation made them worse. I can assure the Committee that it was not with that intention that I got up. I did my best to explain the Estimates as clearly as possible. There has been considerable criticism as to the form of the
Estimates. I can only say that they are in the form which was laid down by the Committee which considered the subject of Estimates, and they are in exactly the same form as that which was followed in the original Estimates. I took considerable trouble this year to try to find out what hon. Members thought, and most of them told me that this form made the reading of the Estimates much easier. If any hon. Member will tell me any way in which we can make them clearer I promise him that we will do the best we can to present them in a way which will enable any hon. Member to pick up the point as soon as he sees the items.

Sir D. MACLEAN: May I suggest that the Estimates for the Navy were presented in a much clearer way.

Lieut.-Colonel STANLEY: The Estimates Committee recommended a certain form, and we have adopted it. Now the right hon. Gentleman says that he would prefer another form, but that would involve a difficulty. Coming to the points which have been raised the chief question referred to was the reconditioning of ships. I did my best to make that clear. Hon. Members should remember that I explained at the beginning that this covers a period from 1919 up to the present time. At that time I suppose that Great Britain was responsible probably for three-quarters of the shipping in the world, and these items were distributed all over the world. It is obvious that those bills do not come in at once. It is also obvious that nobody could say what was going to be the cost of reconditioning ships. I would not like to go into figures, but I have been told, not in the War Office, but in other places, how the cost of reconditioning ships has varied during those two years. Hon. Members have been making the point that this is an enormous increase on the original Estimate. I am prepared to grant that, but it was impossible to estimate then with any approximate degree of accuracy what the cost would be. This is an Estimate for something like £3,500,000, and when I state that the total Estimates for shipping and reconditioning during those two years was something like £35,000,000, I do not think that in the extremely difficult circumstances it is unfair to say that the budgeting has been so bad where there has been only 10 per cent, difference in these difficult times.
The hon. Member for Greenock (Sir G. Collins) said that we might have set aside money for these items that have arisen. That is true, but if we had set aside, say, £15,000,000 or £16,000,000 for terminal charges, and that the total amount came to only £8,000,000, the first charge brought against us would be that we had budgeted in excess and had therefore increased taxation. We have these charges coming in, and everybody knew that they would have to come in some time. To say that we were to take a chance shot and estimate in order to cover them would have been to ask us to do something far worse than to come before the Committee now and ask for a Supplementary Estimate to pay debts incurred during the War. I will try to explain this Estimate a little better than I did before. The Noble Lord (Lord R. Cecil) pointed out that in page 4 we set out that the increase under Head I, "Maintenance of Troops at Home," is practically balanced by the similar reduction in the Middle East, and he made great play of the suggestion that as the £500,000 is shown as a diminished receipt it therefore disappears. I am endeavouring to point out that the charge on the taxpayer is more or less covered. It is quite true that we spent more. At the same time there was a saving in the Middle East of £500,000, but that has not been handed over to us, as far as our account is concerned, as a counterbalance, and we are getting a lesser Appropriation-in-Aid by that £500,000.

Lord R. CECIL: May I suggest to the hon. and gallant Gentleman that it is rather confusing, if that kind of accounting is to be adopted. This Estimate is really for the purpose of showing what the War Office, as such, has cost the taxpayer. It may well be, that other Departments have made analogous savings, which, when you are making a general Budget statement, may be taken into consideration in estimating the total cost of these military operations, but on this Estimate, it appears to me, it is misleading to say that £500,000, which has not, in fact, been received by the War Office, can, in any respect be used as a balance against the increased expenditure.

Lieut.-Colonel STANLEY: I quite see the point of the Noble Lord. At the same
time he will observe we are showing that we have spent £650,000, and we are showing that we have not got an Appropriation-in-Aid. Therefore we are merely showing the £650,000 which we have actually spent.

Lord R. CECIL: That is what I object to.

Lieut.-Colonel STANLEY: I quite see the Noble Lord's point. If we had put in the net saving to the taxpayer it might have been better. The right hon. Gentleman the Member for the City of London (Sir F. Banbury) was not quite fair in the remarks he made. He said we had taken £1,000,000 which ought to have been spent on the Army, and had spent it on the Middle East.

Sir F. BANBURY: No, I said that a saving of £1,000,000 which should have gone to the reduction of the Supplementary Estimate had been presented to the Colonial Office.

Lieut-Colonel STANLEY: That is precisely the statement to which I take the strongest objection. Nothing of the sort has been done. My right hon. Friend has managed to confuse the figures perhaps worse than I did. He takes on page 4 the total estimated saving, which is shown in the Middle East as £1,000,000. That is the result of adding together the total estimated savings shown on pages 3 and 4 for the Middle East of £500,000 in each case. That makes a total of £1,000,000, and it is counterbalanced by the fact that we do not get an Appropriation-in-Aid. But the right hon. Gentleman then looks lower down where there is a net total of £1,000,000, and he takes that as another £1,000,000.

Sir F. BANBURY: I said so earlier in the Debate, but I admitted my mistake, and said that what I had supposed to be £2,000,000, was really £1,000,000.

Lieut.-Colonel STANLEY: I apologise to my right hon. Friend if I misunderstood him. The whole thing is this. We have saved certain sums; we also have had to pay out large sums on these terminal charges. The savings we have made, together with the increased receipts, have been subtracted from the total sum of £9,534,000, which leaves us with a total of £7,124,000. Perhaps at this point I may refer to the question raised by the hon. Member for Peebles (Sir D. Maclean)
in regard to showing diminished receipts and increased receipts. It is perfectly obvious, as he said, that if we used four columns we should explain the matter more easily. I do not think it is an extremely difficult matter.

Major-General SEELY: Why not have the fourth column?

Lieut.-Colonel STANLEY: It is perfectly possible to do so, and indeed it might be more convenient to do so. There is now this question of the £2,224,000 which is shown in the last paragraph. The explanation of it is this. We presented our Estimate for the Army some time last March. There was a total sum for the Army and for the Middle East together. Later on, when the Middle East was handed over to the Colonial Office, it was necessary to put in a revised Estimate. That Estimate was put in for the amount which it was expected the Middle East would cost. That was not so much as had been originally estimated when all was in one Estimate. There was a difference of £2,224,000. That money had already been voted and therefore was kept in what may be called a suspense account during the year, not being allocated either to the Colonial Office or to ourselves, and it is not allocated towards the reduction of this Supplementary Estimate. I think this explanation makes it clear.

Sir F. BANBURY: My criticism was that this sum was in sight when the revised Estimate of 31st May, 1921, was presented. Why was it not then included in that revised Estimate?

Lieut.-Colonel STANLEY: I have not made my point clear yet. The War Office put in an Estimate in March for the whole of the War Office expenses plus expenses in Iraq. Later on it was realised that the amount we had put down in order to cover expenses in Iraq was greater than was necessary. A revised Estimate had to be presented in May, in order to transfer sufficient money to the Colonial Office to enable them to carry on in Iraq. The amount paid was less by £2,234,000 than we had originally put in our Estimate for the administration of Iraq. That is the whole explanation of that point. The hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood) had some rather
caustic remarks to make when he sought to find an appropriate appellation for us. He made some remarks on the Territorial Army with which I do not believe he himself really agrees. I certainly do not agree with them. He said that the Territorial Army was being extremely badly treated, and that we were saving on it. We have allowed a certain amount of money for that army, and the only saving which is being made is because of the shortage of recruits. I am not sure whether I used those words previously, but I certainly intended to do so.

Colonel WEDGWOOD: That is what I complain of. Your machine is costing all the, original money, but it has nothing underneath it. It is all officers and no rank and file.

Lieut.-Colonel STANLEY: It is not so bad. We have got 126,000 rank and file, and I do not think the hon. and gallant Member can complain very much about that. We had hoped for 200,000 and we want to get up the numbers as soon as possible. That does not mean to say that we are endeavouring to save by reduced numbers.

Colonel WEDGWOOD: Your machine is for 200,000, but you have only 126,000.

Lieut.-Colonel STANLEY: That is not our fault. The hon. and gallant Gentleman also said that 10 years ago more accurate budgeting would have been insisted upon. That is perfectly true, but he must remember that things were very different 10 years ago. It was pretty easy then to budget with a considerable degree of accuracy, and to estimate what your expenses would be. I tried to point out as clearly as I could that these are terminal charges, of which nobody could foresee the exact amount. It is utterly impossible to have done it. The hon. and gallant Member for Stirling (Major Glyn) said that the shipping was not really done by the War Office, but he wanted to know what was going to be done in future. That is all going to be done in the future by the Board of Trade—the whole of the shipping. The hon. and gallant Member for Central Hull (Lieut.-Commander Kenworthy) asked whether we had had any cash from the German Government. That does not come to the War Office, but to the Treasury. He
asked whether any of this money was for the transfer of troops to Silesia, and I can tell him that it is not.

Mr. G. LOCKER-LAMPSON: Will the hon. and gallant Member answer my question about the £650,000, whether it was merely a transfer of expenditure from the Middle East to the Army?

Lieut.-Colonef STANLEY: I have been explaining that that £650,000 is caused by the transfer of British troops from the Middle East, the requirements of Ireland, and the impossibility of disbanding cavalry regiments as early as was expected. That is how the £650,000 was made up, and it has nothing whatever to do with the Middle East. My hon. and gallant Friend the Member for South-port (Lieut.-Colonel White) asked about the number of horses sold, but I am afraid I cannot give him that. He asked whether there were any from Iraq, but there are none from Iraq. These are only horses that have been sold in Constantinople and Egypt, and it may interest the Committee to know that- the General Officer Commanding has strict orders to ensure that horses are sold only to people who will treat them properly. The average price, I may say, at Constantinople is £44 for horses and £40 for mules, and in Egypt it is £32 for horses and £36 for mules, so that obviously people are not going to pay those sort of prices for horses and mules if they are not going to take care of them.

Captain COOTE: Will the hon. and gallant Gentleman say if any, and, if so, how much, of the sum paid to the Government of India is in respect of service in Persia?

Lieut.-Colonel STANLEY: The total amount was £120,000, none of it in East Persia. It was all a charge that happened during the War, and the whole of the discussion has been as to the incidence between ourselves and India, and we have-now settled that our charge is £120,000.

Sir F. BANBURY: Did I understand my hon. and gallant Friend to say that they had not given the money to the Colonial Office?

Lieut.-Colonel STANLEY: No, we have not.

Sir F. BANBURY: I say you have. But perhaps I used the word "given,"
when I ought to have said that the War Office have not insisted upon the Colonial Office paying them what they owed them, namely, £1,000,000. It seems to me it is exactly the same thing as giving it to the Colonial Office if you say to the Colonial Office, "You ought to pay this money, but we will let you off." On page 5 of the Estimate it says:
The further saving of £1,000,000 on the Middle East shown above is automatically balanced by an equal reduction in the receipt from the Colonial Office, credit for which is included in the £1,124,000 shown on page 32 of the Civil Services Supplementary Estimate of 7th February, 1922.
I contend that in ordinary life, if my hon. and gallant Friend owed me £10, and I said "You need not pay me, but hand it over to the hon. Gentleman sitting at your side," that would be making a present to my hon. and gallant Friend, because I should not be exacting that £10 which he ought to have paid me, but would be allowing him to give it to my hon. Friend, who is no doubt a deserving person. I am not quite sure that the Colonial Office is quite such a deserving person. What I am saying is all in the interests of the Army, because I do not want the Army cut down, and I do not want it to appear that the Army is spending more money than it really is in order that the Colonial Office may make a saving. I am not, therefore, criticising the War Office, but really acting as their candid—well, not their candid, but their sincere, friend. I think I understand now why the sum of £2,224,000 was not dealt with on the 30th May, 1921. I hope that in future we shall not mix up the various Departments with the War Office, and that if we do, the War Office will insist that its debtors shall pay their debts.

Lieut.-Colonel STANLEY: The right hon. Baronet has kindly suggested giving me £10.

Sir F. BANBURY: No, that is the wrong way of putting it. My hon. and gallant Friend owes me £10, and I say he need not pay it. According to my hon. and gallant Friend, that is not giving him a present of £10.

Lieut.-Colonel STANLEY: What the right hon. Gentleman says is this, that the Middle East owed us £1,000,000, and we let them off. That is not quite the case. We did not incur that money on
behalf of the Middle East, and therefore the Middle East does not give us that Appropriation-in-Aid. That is the whole explanation of it, and we are not taking anything at all away from the Army. It is a saving that was made out there; we did not incur it on behalf of the Middle

Resolution to be Reported upon

East, and therefore the Middle East give us a reduced Appropriation-in-Aid.

Question put, "That a sum, not exceeding £4,899,900, be granted for the said Service."

The Committee divided: Ayes, 59; Noes, 122.

Division No. 45]
AYES.
[1.56 p.m.


Addison, Rt. Hon. Dr. Christopher
Hirst, G. H.
Short, Alfred (Wednesbury)


Ammon, Charles George
Hogge, James Myles
Sitch, Charles H.


Barker, G. (Monmouth, Abertillery)
Irving, Dan
Smith, W. R. (Wellingborough)


Barnes, Major H. (Newcastle, E.)
John, William (Rhondda, West)
Spencer, George A.


Briant, Frank
Johnstone, Joseph
Sutton, John Edward


Bromfield, William
Jones, Morgan (Caerphilly)
Swan, J. E.


Cape, Thomas
Kennedy, Thomas
Thomas, Rt. Hon- James H. (Derby)


Cecil, Rt. Hon. Lord R. (Hitchin)
Kiley, James Daniel
Tillett, Benjamin


Collins, Sir Godfrey (Greenock)
Lambert, Rt. Hon. George
Walsh, Stephen (Lancaster, Ince)


Cooper, Sir Richard Ashmole
Lawson, John James
Watts-Morgan, Lieut.-Col. D.


Davies, A. (Lancaster, Clitheroe)
Locker-Lampson, G. (Wood Green)
Wedgwood, Colonel Josiah C.


Davison, J. E. (Smethwick)
Lyle-Samuel, Alexander
Wignall, James


Edwards, C. (Monmouth, Bedwellty)
Maclean, Neil (Glasgow, Govan)
Williams, Aneurin (Durham, Consett)


Edwards, G. (Norfolk, South)
Maclean, Rt. Hon. Sir D. (Midlothian)
Williams, Col. P. (Middlesbrough, E.)


Erskine, James Malcolm Monteith
Mosley, Oswald
Wilson, James (Dudley)


Finney, Samuel
Naylor, Thomas Ellis
Wintringham, Margaret


Galbraith, Samuel
Parkinson, John Allen (Wigan)
Young, Robert (Lancaster, Newton)


Gillis, William
Richardson, R. (Houghton-le-Spring)



Grundy, T. W.
Roberts, Frederick O. (W. Bromwich)
TELLERS FOR THE AYES.—


Harmsworth, Hon. E. C. (Kent)
Rose, Frank H.
Mr. G. Thorne and Mr. T.


Hartshorn, Vernon
Royce, William Stapleton
Griffiths.




NOES.


Allen, Lieut.-Col. Sir William James
Gardner, Ernest
Norton-Griffiths, Lieut.-Col. Sir John


Amery, Leopold C. M. S.
Gibbs, Colonel George Abraham
Ormsby-Gore, Hon. William


Armstrong, Henry Bruce
Gilmour, Lieut.-Colonel Sir John
Parker, James


Ashley, Colonel Wilfrid W.
Glyn, Major Ralph
Pearce, Sir William


Baldwin, Rt. Hon. Stanley
Green, Joseph F. (Leicester, W.)
Pease, Rt. Hon. Herbert Pike


Balfour, George (Hampstead)
Greenwood, Rt. Hon. Sir Hamar
Perkins, Walter Frank


Banbury, Rt. Hon. Sir Frederick G.
Greig, Colonel Sir James William
Perring, William George


Banner, Sir John S. Harmood-
Guest, Capt. Rt. Hon. Frederick E
Pownall, Lieut.-Colonel Assheton


Barlow, Sir Montague
Hamilton, Major C. G. C.
Preston, Sir W. R.


Barnett, Major Richard W.
Hancock, John George
Rawlinson, John Frederick Peel


Barnston, Major Harry
Hannon, Patrick Joseph Henry
Rees, Sir J. D. (Nottingham, East)


Betterton, Henry B.
Haslam, Lewis
Rees, Capt. J. Tudor- (Barnstaple)


Blake, Sir Francis Douglas
Hennessy, Major J. R. G.
Remer, J. R.


Borwick, Major G. O.
Hilder, Lieut.-Colonel Frank
Richardson, Sir Alex. (Gravesend)


Bowles, Colonel H. F.
Hinds, John
Samuel, A. M. (Surrey, Farnham)


Breese, Major Charles E.
Hopkins, John W. W.
Seely, Major-General Rt. Hon. John


Brittain, Sir Harry
Hurd, Percy A.
Shortt, Rt. Hon. E. (N'castle-on-T.)


Broad, Thomas Tucker
Inskip, Thomas Walker H.
Simm, M. T.


Brown, Major D. C.
Jesson, C.
Smith, Sir Malcolm (Orkney)


Camplon, Lieut.-Colonel W. R.
Jodrell, Neville Paul
Sprot, Colonel Sir Alexander


Carew, Charles Robert S.
Jones, J. T. (Carmarthen, Llanelly)
Stanley, Major Hon. G. (Preston)


Cautley, Henry Strother
Kellaway, Rt. Hon. Fredk. George
Stanton, Charles Butt


Chamberlain, Rt. Hn. J. A. (Birm. W.)
King, Captain Henry Douglas
Sueter, Rear-Admiral Murray Fraser


Cheyne, Sir William Watson
Law, Alfred J. (Rochdale)
Sugden, W. H.


Clay, Lieut.-Colonel H. H. Spender
Lewis, T. A. (Glam., Pontypridd)
Sutherland, Sir William


Cockerill, Brigadier-General G. K.
Lloyd-Greame, Sir P.
Thomson, F. C. (Aberdeen, South)


Colfox, Major Wm. Phillips
Locker-Lampson, Com. O. (H'tingd'n)
Thomson, Sir W. Mitchell- (Maryhill)


Colvin, Brig.-General Richard Beale
Lowther, Maj.-Gen. Sir C. (Penrith)
Tryon, Major George Clement


Coote, Colin Reith (Isle of Ely)
Macdonald, Rt. Hon. John Murray
Wheler, Col. Granville C. H.


Craik, Rt. Hon. Sir Henry
Mackinder, Sir H. J. (Camlachie)
White, Col. G. D. (Southport)


Edgar, Clifford B.
Macnamara, Rt. Hon. Dr. T. J.
Williams, C. (Tavistock)


Edge, Captain Sir William
Macquisten, F. A.
Williams, Lt.-Col. Sir R. (Banbury)


Edwards, Major J. (Aberavon)
Mitchell, Sir William Lane
Willoughby, Lieut.-Col. Hon. Claud


Edwards, Hugh (Glam., Neath)
Mond, Rt. Hon. Sir Alfred Moritz
Wills, Lt.-Col. Sir Gilbert Alan H.


Elliot, Capt. Walter E. (Lanark)
Moore, Major-General Sir Newton J.
Wise, Frederick


Evans, Ernest
Morden, Col. W. Grant
Worthington-Evans, Rt. Hon. Sir L


Falie, Major Sir Bertram Godfray
Morrison-Bell, Major A. C.
Young, E. H. (Norwich)


Fisher, Rt. Hon. Herbert A. L.
Murray, Hon. Gideon (St. Rollox)
Young, W. (Perth & Kinross, Perth)


Forestier-Walker, L.
Neal, Arthur



Foxcroft, Captain Charles Talbot
Newman, Colonel J. R. P. (Finchley)
TELLERS FOR THE NOES.—


Fraser, Major Sir Keith
Newman, Sir R. H. S. D. L. (Exeter)
Colonel Leslie Wilson and Mr.


Gardiner, James
Norman, Major Rt. Hon. Sir Henry
Dudley Ward.


Original Question put, and agreed to.

Monday next. Committee to sit again upon Monday next (13th March).

ANGLO-PERSIAN OIL COMPANY [PAYMENT OF CALLS].

Considered in Committee.

[Sir EDWIN CORNWALL in the Chair.]

Motion made, and Question proposed,
That it is expedient to authorise the issue out of the Consolidated Fund of such sums, not exceeding in the whole nine hundred and fifty thousand pounds, as are required for the payment of calls on share capital in the Anglo-Persian Oil Company, Limited; to authorise the Treasury to borrow money by the creation of securities for the issue of such sums or the repayment thereof, the principal of and interest on any such securities to be charged on the Consolidated Fund; and to amend the Law with respect to the application of dividends or interest on capital held in the said company.

The FINANCIAL SECRETARY to the TREASURY (Mr. Hilton Young): This is a formal Money Resolution, preliminary to a Bill it will be my duty to introduce to the House shortly. The Resolution, of course, is necessitated by the form of the Bill being actually and technically a Money Bill, but the substance of the matter is this: It will be within the memory of the Committee that it is several years now since the State first took an interest in the Anglo-Persian Oil Company by the Anglo-Persian Oil Company (Acquisition of Capital) Acts, 1914 and 1919. Under these Acts we purchased, for reasons of policy which were fully discussed at that time, a controlling interest in the Anglo-Persian Oil Company of £4,250,000.

Mr. LYLE-SAMUEL: Is that the total sum, or the sum under the first Act?

Mr. YOUNG: The total sum, including one million ordinary shares of which one shilling only was paid up, and this is the holding to which we call attention now.

Colonel WEDGWOOD: Of a nominal value of £1?

Mr. YOUNG: Yes. By this purchase, the Committee will observe, we undertook a liability towards the company and towards those who entered into contracts and other relations with the company of paying the uncalled capital upon these shares as and when the call for that uncalled capital should be made. At that time we told the House that it would be several years before such call was likely to be paid, and so eventually it has turned
out. Several years have elapsed before the desirability of paying up the remainder of uncalled capital has been realised. It is in order to enable the Government to satisfy the liability and to pay up this uncalled capital on the one million ordinary shares that this legislation is now introduced. The purpose of the Bill to which this Resolution leads is to enable the Government to pay up the balance of 19s. per share on the one million partly paid-up £1 ordinary shares.
The circumstances which bring this about are the natural and normal expansion and growth of a great and very prosperous industrial undertaking. The fresh capital required by the company is in order to expand and develop in the ordinary course its very profitable undertaking. I understand the actual purpose for which this fresh capital is required is the construction of tank steamers for the carriage of oil. Apart from these ordinary commercial circumstances which have made it desirable for the company at the present time to have fresh capital, I believe the Committee will agree that, from the point of view of the Government itself, once we have undertaken this thing, it is really quite desirable that we should carry it through, and not have any liability resting upon the Government: that we should discharge these contingent liabilities at an early date.
The particular investment, as the Committee is aware, has proved a highly profitable one. This company, in a single word, is a great industrial success. I need only quote two or three recent dividends to show that. In 1918–19 the dividend, free of Income Tax, was 10 per cent, on the ordinary shares; in 1919 it was 20 per cent.; in 1920–21–20 per cent, declared and already paid. There is, therefore, no cause for apprehension by His Majesty's Government from the point of view of profit in this particular undertaking. The form of Statute to which this Resolution leads follows very closely, I think verbatim, et literatim, the form of previous enactments dealing with these matters. It takes power to enable the Government to meet this call which will amount, as the Committee will have already calculated, to £950,000, and it further takes power to authorise the Treasury to borrow money, and so on. I think that is the whole structure and also the substance of the matter relevant to this proposal. I need only particularly
emphasise that this is taking power to discharge a liability which we undertook under the various Acts from 1914 to 1919.

Mr. LYLE-SAMUEL: Are there any other shares besides the ordinary shares that are called upon?

Mr. YOUNG: I am very glad the hon. Member has given me that reminder. Other shareholders, holding the same class of shares, will also pay the call similarly.

Mr. G. MURRAY: What are the various classes of shares?

Mr. LYLE-SAMUEL: For the convenience of the Committee, will the hon. Gentleman kindly give us figures of the share capital?

Mr. YOUNG: Certainly. Our investment in the company amounts to 4,000,000 £1 Ordinary shares, fully paid; 1,000,000 Ordinary shares, of which Is. is paid—the class with which I am dealing—1,000 8 per cent. Preference shares, and 199,000 5 per cent. Debenture stock.

Mr. LYLE-SAMUEL: What are the 1,000 Preference shares?

Mr. YOUNG: Nominally £1. The final observation I would make is that we are taking power to discharge a legal liability undertaken under the previous Acts of 1914–19, for there can be no question that the Government must be in a position to discharge liabilities of the sort undertaken by them.

Colonel WEDGWOOD: This Anglo-Persian Oil investment has already been as satisfactory to the State as the Suez Canal shares' venture, and we all hope that it will prove satisfactory in the future. In his statement this afternoon, however, the hon. Gentleman has passed over what I consider to be the most vital part of this venture. He has omitted to state whether or not the Government hold the controlling influence in this company, that they not merely hold the shares, but that they, up till now, have controlled the company by owning the major part of the voting power. I want to be assured, in the first place, that the recent increase in the capital of the company, both Preference and Ordinary shares, has not risked our voting control. Do we still
possess the power to direct the operations of the company? I hope that is so.
I now want to ask why it is necessary to come forward at the present moment when money is difficult to get and ask for this 19s. per share call? Anyone who understands this question must be aware that the dividend of 10 per cent, paid in 1918–19 and 20 per cent, in the two following years by no means absorbed the whole of the profit of the company during those years, and if the profits had been put to the reserve fund I am sure the shareholders would have been as content as they are at the present moment, and this 19s. call might have been made upon those reserves. Other companies put big sums to reserve, and they use that reserve to pay up shares. I think that course would have been infinitely more preferable than coming to the country now for this money, when we are not even able to find money for the starving peasants of Russia. I hope that the Government still control the company, and that they still have a majority of the shares. If that is so, why is it that they have a minority on the board of directors? It seems to me that control over the shares ought to carry with it control over the directors. I believe there are two directors nominated by the Government out of a board of nine or ten members, and therefore the Government is not in a position to dictate the policy of the company. We ought to have a more public-spirited control of this company. I believe the Anglo-Persian Oil Company also controls the oil shale mines in Scotland.

Mr. MACQUISTEN: They have bought a refinery in Scotland.

Colonel WEDGWOOD: I do not like to be interrupted and I want an answer from the Government. I believe the Scottish oil shale mines are closed down, or else the men employed there are working at such wages that they are forced to get assistance from the boards of guardians in order to keep body and soul together. If that is so, it does not reflect credit upon the Anglo-Persian Oil Company, and it looks as thought they were developing Persian oil and closing down other sources of supply in order to obtain a monopoly and get a higher price for Persian oil. If this company is to be directed in the interests of the whole community, then they ought to see that
the Scottish mines are developed at least as fully as their undertaking in Persia.

Mr. MACQUISTEN: They were shut down by the coal stoppage.

Colonel WEDGWOOD: Perhaps the hon. Member will be able to make his own contribution to the Debate later on. I understand that the directors are closing down the shale mines in Scotland because they can get oil cheaper elsewhere. I submit that when we are adding to the capital of this company, and when we are going to pass a Bill to increase its capital to enable it to raise another £950,000, we should use this opportunity to increase at the same time the representation of the public on the board of directors, so that we may have the direction of this company in the hands of people who will be actuated by the interests of the community as a whole, and not simply the interests of the shareholders.

Mr. LYLE-SAMUEL: The speech of the hon. and gallant Member who has just sat down is sufficient to satisfy this Committee of the utter undesirability of the Government having any proprietary interest in any commercial undertaking. Except purely for State reasons and State policy, no circumstances would justify the investment of public money in a company which is being run for profit. My hon. and gallant Friend the Member for New-castle-under-Lyme (Colonel Wedgwood) seemed to be in the difficulty of not being quite sure whether he wants this company to pay dividends to shareholders, or whether it should be exploited in order that certain people should be kept at work in an unprofitable undertaking. I think it is most undesirable that the Government should have any interest in this or any other trading company. We do, however, want to congratulate the Government that they are asking the Committee to approve of the paying of this money for use by a board of directors who do seem to be able to work this company successfully. The Government have had a very sad and sorry experience in making contributions to the shares of industrial concerns. I do not know what we have lost in British Dyes or British Cellulose, but what I am sure about is that the Government ought not to have bought a single share in either of those
companies. In asking the Committee to pass this Vote we are merely carrying out a contractual obligation.

Mr. KILEY: They are calling up new capital.

Mr. LYLE-SAMUEL: I do not think there is any need that these things should be obscure. The Government have undertaken to subscribe for one million £1 shares and they have paid 1s. per share. Now the directors have decided that the Government should pay the remaining 19s. and therefore the Committee has nothing more to do except honour this obligation. Although this Committee will unanimously agree to honour this contract and we are in a position of being able to congratulate the Government upon their only successful financial investment, it would be satisfactory to the Committee if the Government would say that, so far as they are prepared now to declare a policy, they will declare that they will not ask any Committee of this House in the future to make any contribution whatsoever to any industrial concern in this country. Unfortunately we have made an investment in the beet sugar industry and the Government have no right to go on making investments of that kind. How can any Member of the Government express the Government policy upon an oil business, because only oil men understand the business. Does anyone imagine for a moment that there is sufficient commercial business capacity in the Government to direct such a vast commercial undertaking as the Anglo-Persian Oil Company? There is no collective wisdom in the Government which does not reside in any single Member of it. My hon. Friend says that the Government have a majority of shares and that it ought to have a majority on the Board. Who is to nominate those directors? The Government. Who are they to nominate? Only Members of this House, because this House only can pledge public money and credit. This is public money, and this House can alone protect public money.

Colonel WEDGWOOD: May I point out that exactly the reverse is the policy pursued when we nominate a director on the Suez Canal. He resigns his seat in this House when he becomes a director, and the same would be done here.

Mr. LYLE-SAMUEL: That is my very point. He becomes a paid servant of the company and receives a fee as a director, and his sole obligation is to the shareholders of the company. If this House continues this policy of finding public money for public concerns, it seems to me impossible that this House can discharge its duty to the people whose money it has taken by keeping in its hands the control of the company for which public money has been taken. The hon. and gallant Member asked whether the Government have a majority on the board. Of course they have not, and they could not have. The Government control the shares of this company, and the only way in which they can do their duty is to nominate the best men who are competent to run an oil business, and that they have done. They have only two directors and they are in a minority. It is perfectly clear, unless public money is to be lost, that when public money is invested in a company there must be one policy, and that is to try and protect the capita] invested in the company and to make it earn a dividend which will be some amelioration of the public exchequer. Like every other Member of the Committee, I shall support the Government in asking for this grant, because we must vote it, and I am glad to congratulate the Government on so successful an experiment, but I do hope they will say that they disapprove of this policy which they unwillingly undertook during the War of investing public money in commercial concerns and that it is going to be brought to a conclusion.

Sir F. BANBURY: I have provided myself with the Stock Exchange Official Intelligence. Unfortunately, the only one that I could find in the Library was for 1920 instead of 1921, but there is sufficient in it for my purpose. The Financial Secretary to the Treasury, quite unintentionally, misled the Committee. He said, and the hon. Gentleman who has just sat down supported him, that the Government were only carrying out an obligation. They were under a statutory obligation to pay this money if the call were made, and therefore they were obliged to meet their obligation. That is not so. According to the Stock Exchange Official Intelligence, the Government have the right to appoint two
directors, which is a minority of the board. These two directors, however, have very exceptional powers. They can negative any proposition made by the other directors. Therefore, when the proposal was made to the board to make a call on these shares it would have been within the power of the two directors appointed by the Government to negative the proposition, and once the proposition was negatived the necessity to raise this £950,000 would have disappeared. That being so, there is some force in the statement made by the hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood) that this is rather an unpropitious moment to come forward and ask the country to find nearly £1,000,000.
I understand from the Stock Exchange Official Year Book that the Government have 5,200,000 ordinary shares. Some of them are fully paid and some of them are not. The total issued ordinary capital of the company is £7,500,000, and therefore the Government own two-thirds of the actual capital besides having two directors on the Board who can negative any proposition. It is said that this call is made in order to provide tank steamers. Again, I see that the company own 22 steamers. I should have thought that that was a fair number to own. They succeeded with 22 steamers in paying 20 per cent. in 1919 and 20 per cent, in 1920. I should have thought that that was good enough without finding any more steamers. I do not know whether anyone has more steamers to sell. Under these circumstances, this Committee ought to consider very carefully whether it is advisable to give this money to the Government. The suggestion has been made that this is an unavoidable liability which the Government are in honour bound to fulfil. It is nothing of the sort. It is merely a call of capital in the ordinary way, not to meet any obligation entered into and not by a company which is in a bad way and requires more money, but in order to provide more steamers, and the call can only be made if the Government consent. If the Government, through their two directors, refuse to consent, then the call need not be made.

Mr. LYLE-SAMUEL: If the two Government directors have already consented and if it has been passed as a minute of the Board, has not the opportunity for the Government to object gone, and is it
not a fact that this Committee is committed to carrying out the obligation?

Sir F. BANBURY: As far as my small experience goes, it is always possible to revoke the decision of a Board in the same way as you can repeal an Act of Parliament. It must be remembered that all these decision made by the Government are dependent on the consent of the House of Commons. There appears to be an idea, not only in Government circles, but also in the minds of hon. Members, that all the Government have to do is to say, "We will do so and so, and provide £10,000,000 or £20,000,000," but it must be understood that before the Government can do this they have to get the consent of the House of Commons, and, without that consent, they cannot comply with the arrangements they make. It should always be the custom in this country to bear that principle in mind, and I feel therefore that the argument of the hon. Gentleman on the point falls to the ground. Now I come to the dividends that have been paid—10 per cent, in 1918, 20 per cent, in 1919, and 20 per cent, in 1921. An hon. and gallant Member near me suggests that that is profiteering. I do not say so, but it is a curious thing there should be so few Members of the Labour party here to speak on a question which my hon. Friend describes as profiteering. I am rather sorry the company did pay these dividends. In my younger days I bad a good deal of experience in business, and I learnt that if a gentleman living in the West End came down to the City and started to speculate, if he lost on every speculation, as a sensible man, he soon gave it up, but if, unfortunately, on one occasion he made a profit, he continued speculating, losing in nine cases out of 10 until he was ruined. I have a case of that kind in my mind, an absolutely sad case.
I am afraid that that is what is going to happen to the Government. The Financial Secretary was very pleased to announce that the company had made these dividends, but he seemed to forget all those other wonderful investments of the Government which have resulted in heavy loss, and in some cases in the total loss of the capital put in. Unless we have further explanations, I do not see why it is necessary to call up this sum of money. I should be inclined to think
that the best course would be for the Committee to negative the proposal altogether. We do not want to encourage the Government to enter into these business operations. In this case they have done fairly well, but let them be content. There are other people interested in the company; we do not want to put difficulties in their way, and if they think it is vital to increase the capital of the company in order to do certain things, let the Government sell their shares to them. Let me offer this piece of advice to the Financial Secretary. The time to sell is when the company is prospering, when it is paying a 20 per cent, dividend—a real dividend, not like a Hooley dividend, a real dividend, properly earned. He will get a very good price for the shares and will not need to come and ask for more money. Probably the Government will make a profit on their bargain which they can use in paying some of the losses they have made in other directions, and we shall be relieved from having our Government interested in commercial transactions. This, I suggest, is sound, commercial advice, a sound business proposition. After all, oil is a speculative undertaking. I do not know anything more speculative. Persia too, does not seem to be a very settled country, indeed it is nearly as bad as Ireland. Here is an opportunity to get out of the investment at a good profit. Let the Government take it, and in order to encourage them to adopt that course, let the Committee refuse to give them this money.

Mr. GIDEON MURRAY: I wish to support the right hon. Baronet who has just spoken in what he has recommended to the Government. I do not wish to traverse the arguments he has put forward so admirably, but I may augment them by reminding the Committee that within the past few weeks there has been a new issue of Anglo-Persian shares, a preference issue subscribed by the public many times over. If that, be the case, and having regard to the fact that the Government directors of this company have the power to negative any proposal that is made by the other directors, I cannot understand why those directors should have done what they did, and why the Government should be coming to the House of Commons to-day to ask for this £950,000. Why did the Government directors not suggest to the other directors
that a better plan would be to go to the City to get the money, which I am sure would have been quite possible? There is another point which I wish to raise particularly, and that is in connection with the whole question of Government trading I admit there are certain matters such as water and even tramways in the City of Glasgow which are admirably controlled by the municipality. That is public service, although very often one interferes with the other. When, however, the Government enter into commercial propositions like oil, cellulose, dyes, and so forth, they enter into an arena of which they know nothing at all. Further, while we have heard to-day speeches commenting on the successful way in which the Government have carried out this undertaking, we have been told nothing of what the result has been outside this country from the point of view of international policy. We all know that during the past two or three years a great deal of light has flooded in upon the oil industry, owing to the enormous competition, in different parts of the world, by different countries and different companies, in order to secure that very valuable source of fuel for the particular countries which the companies represented. The United States of America is the country which, perhaps above all others, is interested with us in obtaining adequate supplies of fuel for domestic purposes, and I am aware—it is common knowledge in the City—that a great deal of feeling has been aroused in the United States by reason of the fact that the British Government have entered into competition with them in what they consider to be essentially a private enterprise.

Mr. SUGDEN: And rightly.

Mr. MURRAY: The hon. Gentleman says it is right that we should enter into national competition with private enterprise in America.

Mr. KILEY: Why not in cotton as well?

Colonel WEDGWOOD: And all the monopolies.

Mr. MURRAY: That, apparently, is what my hon. and gallant Friend would like to see. I do not want to enter into such a broad issue as that at any length, but I do not think that my hon. and gallant Friend will get many members
of the Committee to agree with him on that point. I only suggest to the Committee that there is the gravest danger when our Government enters into competition with private enterprise in countries like the United States. It not only affects the particular issue of oil, but all the other issues of foreign and international interest which may form the subject of negotiations between the two Governments, and I should like to see, as soon as possible, a reversal of this policy of the British Government entering into private enterprise. For that and for the other reasons which I have already stated, I propose to support the right hon. Baronet the Member for the City of London in any action that he may take in order to negative this Resolution.

Mr. SUGDEN: I have listened with very great interest to the argument which the hon. Gentleman has just adduced before the Committee with respect to this Vote. I want at once to make it perfectly clear that not for a single moment do I desire to put forward the argument that the Government are the best people to take the place of the business men of this country. What I want to substantiate is this: When the very sinews and life-blood of our industries are jeopardised—oil fuel, coal and the like—as ofttimes they are, by the illegitimate and disloyal operations in which some countries abroad engage, it is the vital duty of this Government to step in and protect the bread and butter, protect the industry, and protect the industrials of this country. Perhaps the Committee will forgive a personal illustration. During the war days, when I had the honour to serve in a very insignificant and humble capacity, we took the Flammenwerfer of the Germans and, in our research laboratories, we improved upon and dealt with that agency of destruction in such fashion as to protect our own soldiers; but in those days, neither from the United States of America nor from any of our Allies, were we able to obtain all the necessary oils to enable us to deal with that weapon, although the Germans were able to obtain them; [HON. MEMBERS: "What oils?"] If I were to state that, I should be stating what I am not permitted to state, and the Committee must forgive me for keeping that knowledge to myself. That was with respect to war, but in industry, when the
great cotton mills of Lancashire, the woollen mills of Yorkshire, many smelting works in different parts of the country, and the great iron and steel rolling mills were desirous of getting coal and other fuel to carry on their industry, and this was not possible, it was nothing but the foresight of the Government that made it possible to obtain oil to carry on the industries of the country, and, while arguments can be flung across the Floor of the Committee that the difficulties of obtaining fuel have been the result of some of our present bad trade, and of the locking of the wheels of industry, I suggest that the foresight of the Government in making oil marketable and applicable for the use of industry, as a substitute for coal, did do something to reduce the deadlock which has frequently obtained in industry. When we remember the foresight of the Government in regard to the Suez Canal and the shares which they then obtained, we must agree that to-day we have much to thank the Government for in regard to keeping open the near highway to India. Therefore I feel that the Committee would be lacking in its duty to the industrials of this country if it allowed it to be made possible for the intriguing which does obtain in some oil markets to jeopardise the free and sufficient supply of oil, incase the time should ever again come when the question of a substitute for coal may be vital for employment and trade. I am sorry that there should be any question as to the condition of business men on the Front Bench. I am sorry that when a man comes on to the Front Bench he must relinguish all connection with industry. What we do in the House of Commons is to take a man from the ranks of industry, put him on the Front Bench, and compel him to give up his active connection with industry and business; and then we expect him to guide and handle the great movement of industry in our own country. I suggest that we should do well to revise and reconsider the rule to which Ministers are compelled to conform by, shall I say, ostracising themselves from the active conduct of business, for thus you lose that really necessary touch of trade, employers and employés—both at home and abroad. I do not think that the Government should take the place of the great business chiefs of our country, but I think it is vital for our industry, for our industrials, for the
working people of this country, that there should be ample supplies of alternative fuel for industrial requirements over and above those which are now obtainable in the form of coal and other fuels, and also that naval, military and air strategy demand from the Government their consideration of this most important supply. I shall, therefore, support the Government in the Lobby on this Vote.

Lord ROBERT CECIL: I will not stand between the Committee and other speakers for more than a minute or two, but I want to make it clear that there are two quite distinct questions which have been discussed. There is, firstly, the question of the desirability or undesirability of the Government investing in oil and conducting an oil business. Then there is the second question whether it is desirable that they should come to the House of Commons now and ask for £950,000. Those are two entirely different questions. With regard to the first question, I hope that the Committee, if I may respectfully say so, will not go too deeply into this question as to whether or not it is desirable for the Government to have a share in this oil business. It is a very difficult and a very complicated question. I am myself altogether opposed, generally speaking, to Government trading. I do not believe it answers, and I do not think our recent experience is at all favourable to that procedure, but this is a very special case, and I do not want to express any final opinion on it. I do not think it can be dealt with on general principles of Government trading. A very peculiar position prevails in the oil industry. The great mass of it is under the control of a very small number of companies—three or four at the outside. Some people think, at any rate, that there is a very close alliance between these companies. It may well be a question whether it is desirable that this country, in a great national interest and the supply of oil, is, after all, a great national interest—should be entirely at the mercy of these commercial combinations. It is a very difficult and elaborate question and I do not propose to go into it, because the issue raised to-day is a very much narrower one. Let as assume, in the Government's favour, that it was perfectly right for them to have entered into this oil transaction. One of the
conditions on which they entered quite likely was that they were to have control of the policy of the company, and my right hon. Friend has explained that they took measures to secure that nothing which this company did was done without the consent of the Government.
So that we are really asked whether we approve of the policy of raising £950,000 out of the taxes at this moment for the purposes of this company. The Committee ought to hesitate a long time before they sanction such a measure as that. We have had practically no reason put to us why it is necessary at this moment to raise this money. The Financial Secretary said two things. He said it was necessary to buy tank steamers, but he did not say why the 20 or 22 steamers which the company have got are not sufficient. He also said it was a good thing to pay oft a contingent liability. As a broad general principle that may be true, but it is a bad thing to pay off a contingent liability when you are already in want of money, and the right thing to do is to keep that going until you are in a more fortunate financial position. I confess that after the reply we received yesterday about the Russian famine, if we were the very next day to sanction a loan three times as great as that which was asked for the starving peasants in Russia, we should be likely to expose ourselves to very grave and serious criticisms. Therefore, I shall vote against this Resolution.

3.0 P.M.

Lieut.-Colonel SPENDER CLAY: The Noble Lord spoke of the close association which is alleged to exist between the different oil companies, and undoubtedly that creates a considerable danger for the consumers. I feel that the Government bought these shares originally in order to safeguard the oil supply of the Navy, and also to protect the consumers against the danger of a possible combine. I would suggest to the Government that if they are out to protect the consumer, surely it is time that oil prices were cut, rather than that dividends of 20 per cent, should continue to be paid. There is a great danger of Government capital being used in these trading concerns. I know that whenever the Government, by any possible action, interferes in a matter of this kind, the Suez Canal shares are quoted as a precedent. It is true that that gamble
turned out extremely well, but my impression of that transaction was that those shares were bought by Mr. Disraeli without any relation to the Government at all. That gentleman had a Jewish flair for business, and the transaction turned out very well, but there is no reason why it should be used to sanction this transaction. In the matter of these shares the Government should sell their rights on the market. I should imagine that the value of these rights must be many shillings on every one of these million shares. It is possible that the Government, if they sold these shares, might lose the controlling interest in the company. I personally think it would be a good thing if they sold all their shares in the company. But even if they sold the million pounds worth instead of coming to this House and asking for more money, they would have a profit to show on their transaction. The Financial Secretary came down this afternoon and made a very faint allusion to how the money was going to be used. He said he believed it was going to be used for tank steamers, but I should have thought that at a time of great financial stringency this Committee was entitled to a better reason than supposition from the Parliamentary Secretary as to how this money was to be spent. Therefore, unless further information is given, I shall feel compelled to follow the hon. Baronet the Member for the City (Sir F. Banbury) into the Division Lobby against the Government.

Mr. AMMON: I little thought a few days ago when I entered this House that I should find myself more or less in agreement with the Government in any issue before the House. The position now before us is that the Government has adopted the policy which has been formulated and advocated by my hon. Friends of the Labour party for many years, namely, that the Government or municipalities should take steps to protect the community against the increase in the cost of living that arises when certain things are monopolies of private interest.

Sir F. BANBURY: Does the hon. Gentleman know that the company are paying a 20 per cent, dividend?

Mr. AMMON: This country is the second largest user of oil in the world, and it is quite necessary that some steps should be taken to see that the public are protected against the depredations of
the private trader. During the War it became necessary to protect the public by taking control of certain interests which would have exploited the community in the hour of the nation's trial. Now it seems we are in a similar position, that it has got to be done when we are trying to rebuild and reorganise industry and win the peace back again. I imagine the answer to the Noble Lord's criticism is surely that it is good business to put your money into a concern paying 20 per cent. I presume, if it is good that that should go into private profits, it is better that it should go into the national coffers. The only criticism I have to make is that it is a pity the Government did not go the whole way and secure the absolute control of the directors as well as having a large share in the business. If one wanted an illustration we have it very close to our doors. I am a member of the London County Council, and by the fact that the Council owns a certain class of the transit monopoly of this city we have been able to keep down prices to the travelling public in a way which would otherwise not have been possible.

Mr. RAWLINSON: At the cost of the ratepayers.

Mr. AMMON: Not at the cost of the ratepayers, because it is the best paying of any of the traffic authorities on the streets of London, whether it be private or municipal ownership. It is real good business that the Government are taking steps in this direction to break the power of private monopoly, which would exploit the interests and needs of the community under any circumstances, and make their profits a burden and detriment to the community. That being so I hope this is simply the forerunner of further steps, and they will find that out of sheer necessity they will be driven to adopt the programme of the Labour party.

Mr. YOUNG: The issues are, as indicated by the Noble Lord, more closely confined, in so far as they are relevant to the Motion, than some wider and indeed more interesting issues which have been raised. It would be out of place for me to offer any observations on the general policy of investment by the Government
in industry or in this particular industry. I recognise, however, the very strong arguments in favour of such a course which were indicated by the Noble Lord. Any suggestion that this is an indication of a policy on the part of the Government of continued and enlarged investment in industry is entirely beside the mark.

Mr. LYLE-SAMUEL: I did not suggest that that was the indication. On the contrary I asked that the hon. Gentleman should give an assurance that the Government would go no further.

Mr. YOUNG: I rather gathered that the hon. Gentleman suggested that this was an indication of a policy which we were now enacting in this Resolution. I entirely understand his explanation. I may point out, in order to make it clear beyond the possibility of doubt, that there is no question of policy involved in this Resolution. We are simply taking steps consequential upon a question of policy resolved on many years ago. No general pronouncement on such high matters would perhaps be expected from me on this occasion, but so far as this Resolution is concerned, it must certainly be taken as no indication of any intention to take a single step further in the direction of Government investment in industry. Let that be made clear. Some of the criticisms which have been suggested appear to me rather to suggest that the Anglo-Persian Oil Company either was or ought to be conducted on the lines or in the manner of a Government Department. Nothing could possibly be further from what is the case or what I imagine in the opinion of men of common sense ought to be the case. This is a great commercial concern that lives its own life and carries on its own proceedings, and has carried them on with remarkable success under the control and direction of an extremely able and distinguished body of experts, than whom it would be impossible to find men more qualified in the whole of that great industry. It is that practical and substantial independence of this company which in my opinion, and I daresay in the opinion of many Members of this House, has been the chief contributor to its remarkable success. It would, therefore, give the discussion a wrong orientation to say that this company operates under the thumb or the imme-
diate control of the Treasury or of any other Department of the Government or of any Minister. The vital interests of the Government in this concern are secured by those directors of the board and those provisions as to the power of those directors which have been referred to by the right hon. Member for the City of London (Sir F. Banbury).
Let me refer to what I understand has been the principal criticism against this proposition. I do not think a single word has been said which avails to displace that consideration of overwhelming importance which I advanced in laying this proposal before the Committee, namely, that this is, in fact, a legal liability, not a statutory liability, which has accrued against the Government.

Sir F. BANBURY: No.

Lord R. CECIL: The hon. Member says, "a legal liability." Can it be enforced by the Courts?

Mr. YOUNG: I speak with great diffidence on a question of law in reply to a question from so distinguished a member of that profession, but as far as a plain man can speak one supposes that where there is a call based upon shares with an uncalled liability, that call made by the directors in a formal manner imposes upon the holder of the shares a legal liability which can be enforced in the Courts?

Sir F. BANBURY: The directors need not make the call.

Mr. YOUNG: One step at a time. At the present time I offer the suggestion to the Committee that this is, in fact, a legal liability which has accrued against the Government as holders of shares with an uncalled liability. Upon that, two contentions arise. It is said: "You need not have done it at this time." In the second place it is said: "If it has been done it can be undone." Here is a great and valuable asset in the hands of the Government. How are you going to affect the value of that asset if you declare to the business world that you are not going to meet your uncalled liability on the shares? What is going to be the effect upon the credit of this company if, when that call has been formally declared by the directors of the company, the Govern-
ment refuses to meet its liability? You would shatter the credit of the company.

Sir F. BANBURY: Not in the present state of things.

Mr. YOUNG: Many men of great experience in affairs in the City of London, and in this House—I myself have some slight experience also—know how credit affects investments in the market in the City of London, and I assert that when you have a valuable asset of this sort, if you desire to destroy its value in the way you most completely could, it would be after the formal declaration of a call to repudiate your liability, or to express any unwillingness to meet your liability for the uncalled capital. The other principal argument urged against this proposal is, as I understand it, that this is not a good time to make a call. To deal with that argument, I will give away for a moment the contention, which I have strongly made, that this is an accrued liability which we ought to meet, and which it would be fatal not to meet, and I will deal with the point of whether this was or was not the right time for making the call of the uncalled liability. Reverting to what I said at the beginning of my observations, we are not trying, from the Treasury or from the Government, to manage the affairs of the Anglo-Persian Oil Company. As regards its affairs, we follow the advice of the extremely able board of directors who have brought it to such success in its career. If they tell us, even if they were to tell us on their mere ipse dixit, that this is the right time for the company to call on the share capital, and it was their view that they had a good case, then, in view of the record of the management of this company, it would be most unwise for us to refuse to agree to the call.
When there were overwhelming financial circumstances of a different sort in the past, on one occasion such a suggestion has been referred back to the directors of the company. Considerations, which it is needless for me to particularise, might not have been present to their minds, and the call was postponed. On this occasion no such circumstances prevail. The need for capital is in the life of the company. I have been to give a further account of what that need may be. I can most briefly express it in this way. The company's need for finance is a bigger thing than the capital
that will be obtained by the call on the shares, substantially bigger, and, as was said quite rightly by the hon. and gallant Member, there has been a recent successful issue of capital for the company. Substantially more is needed and more will be provided by this uncalled liability. It has been found in the past, for reasons which will readily explain themselves to those familiar with the investing market, that the existence of the uncalled liability is a serious limit to a company obtaining money in the ordinary way in the financial market. The question is the price at which they can get the money, and if the company can get this money cheaper by getting this uncalled liability out of the way, then it is good business to do so. That is the urgent wish of the directors of the company. It is their recommendation. Unless we are prepared to set ourselves up against the managers of that business, which we are not prepared to do, we should be very foolish to reject that recommendation.
We have here an asset of great value, but we who pay in are not embarking on any irrecoverable loan or a loan the recovery of which is very doubtful or indefinite. Everyone differentiates—from the financial point of view which is that from which I now regard it—between this and a loan to Russia. You put in your 19s. in regard to each of your shares, and it adds more than 19s. to the value of your asset. If you refuse to do so, now that you are asked to do so, you destroy the value of your asset. It would be fantastically bad business to refuse to make this call. I must get back, in conclusion, to the point that this is our liability. We have to obtain the consent of the Committee, and we come to the Committee for its consent, advancing what we believe to be overwhelming reasons why that consent should be given, but let it not be put against me, that there has been any anticipation or any surprise to the Committee in this matter. This House undertook that it would meet this liability, by the original Act, and this is merely the normal consequence of business, and we come to ask the Committee to fulfil the liability that has been undertaken.

Colonel WEDGWOOD: Can the hon. Gentleman say whether we have still control of the voting power?

Mr. YOUNG: Certainly, we have full control.

Colonel PENRY WILLIAMS: At the very end of the Resolution the Financial Secretary proposes to take power to amend the law with respect to the application of dividends or interest on capital held in the company. He bas not given us any indication of the alteration which he intends to make in the law. Under the original Act of 1914, and certainly under that of 1919, any dividend that is received from this company is to be applied, firstly, in the repayment of debt which has been sanctioned, and then the remainder is to be handed over to the Treasury, I presume, to be used for the reduction of debt or the relief of taxation. Now the Government proposes to alter and amend the law, and I want to know in what respect they intend to make the alteration? Are they going to take power to invest any dividends received from this company, in certain other of their companies, of which we have a list in this White Paper—a really appalling list?

Mr. YOUNG: Let me hasten to give my hon. Friend the assurance he desires. The Clause to which he refers is a formal Clause, which is necessary in order to reinforce the original provisions. The effect of it will be that there will be powers to adjust, to the fresh circumstances, the former scheme; but all payments from the company shall be in repayment of the sums paid for the shares.

Mr. LYLE-SAMUEL: Has that system been in operation and if so what proportion of shares have been repaid and what is the remainder of this particular issue?

Mr. YOUNG: This is the scheme of finance that has been in operation all through, and the present state of the figures is that under the former Act £2,050,000 was advanced by the National Debt Commissioners and of this £62,745 has already been paid by the application of dividends.

Mr. LYLE-SAMUEL: I wish to ask the hon. Gentleman whether his figures are still right and whether the Government still holds 4,000,000 shares, fully paid, and another 1,050,000 making 5,050,000 in all. May I also ask him if these shares are being repaid at par, and, if so, is not the advantage of the
present situation being lost to the Government and the taxpayer? At the present moment the strong position of the hon. Gentleman is this, that if this House consents to pay up these shares you immediately make a pound share worth £3 and you are improving the value of the Government's holding by £2,000,000. If it is true that there is to be an alteration of the law in respect of the application of dividends, so that the Government is to be repaid at this moment at par, surely then my right hon. Friend the Member for the City of London (Sir F. Banbury) is in a very strong position.

Mr. YOUNG: I think the hon. Member is under a slight, yet a grave, misapprehension. There is no question of cancelling the shares as the money is repaid. It is simply an Exchequer transaction, and as we receive the money for dividends from the company, we pay off the money that we borrowed with which to buy the shares.

Colonel LESLIE WILSON (Joint Parliamentary Secretary to the Treasury): Might I appeal to the Committee to come to a decision—

Mr. KILEY: I have waited two hours to speak.

Colonel WILSON: Perhaps the hon. Member will allow me to give my reasons. There will be several other opportunities. There is the Report stage of the Financial Resolution and the various stages of the Bill. The particular reason why I appeal now is that the whole of next week we are dealing with Supply, and we cannot take any Report stages of Votes now on the Paper. There are two Supplementary Estimates on which it is very important that we should get the Report stage to-day.

Commander BELLAIRS: Will the hon. and gallant Gentleman guarantee that this subject will come up on Report stage before 11 o'clock?

Mr. YOUNG: This Resolution only leads to the Bill, and a full discussion will be necessary on the Bill.

Mr. KILEY: After midnight!

Colonel ASHLEY: I would not say a word if we could have some assurance that the Report stage will come up before 11 o'clock at night, but I do not see why
the Committee otherwise should not have a full discussion on a matter which concerns a million of money in the present state of the national finances. I was in grave doubt whether I should support the right hon. Member for the City of London (Sir F. Banbury) or not till I heard the speech of the hon. Member for North Camberwell (Mr. Ammon). When the Labour party support the Government, I always vote against it, because it means that the Government have given way to the pressure of an extreme portion of this House. As in this case they have gone in for Government trading, a thing which I abhor, they have entirely followed the dictates of the Labour party, and I understand the hon. Member for Camberwell is now leading the Labour party in the London County Council, whose policy is municipalisation of all means of exchange and production. Therefore it seems to me perfectly obvious, apart from any other consideration, that the Government must be absolutely wrong in their attitude to-day, because they are going to receive the unanimous support of the party which stands for nationalisation of all things. Apart from that, and apart from the question of whether it was right or wrong for the Government to have entered into this enterprise—and seriously, possibly at the time it was right—what I maintain the Committee ought to consider now is not whether the principle which the Government went in for was right at the time, but what we ought to do at the present moment. We are suffering terribly from over-taxation, and I think it is extremely inopportune at the present time that the taxpayer should be asked to find £950,000 of fresh money to go into a trading concern, which is apparently good now, but which may be bad in two or three years' time. Probably I shall not be supported in this statement by some of my hon. Friends, but I confess that I have a good deal of sympathy with the statement of the Noble Lord the Member for Hitchin (Lord R. Cecil) when he said that it really would be a slur on this House if we found nearly £1,000,000 to-day for the purposes of some trading concern in which the nation is interested when we refused yesterday to find a third of that sum to relieve the famine in Russia. I quite agree with the decision of the Government not to find that money, but I think
it would be rather a scandal that we should find £1,000,000 of the taxpayers' money now to go into a trading concern when we refused to give that relief to the starving people of Russia.

Mr. STANTON: There is no relationship between the two things.

Colonel ASHLEY: May I reinforce what fell from an hon. Member on this side of the Committee, who urged the Government to sell their interest in the company at the present moment as soon as possible. They could make an excellent profit out of the transaction. The taxpayer would not have to find this million of money. They would clear themselves from what many of my hon. Friends have said, namely, the taint of going into trading by the State, and I certainly shall support my right hon. Friend the Member for the City of London if he votes against it.

Sir OWEN PHILIPPS: The matter before the Committee appears to me to be a very simple one. The Government of the country own a number of shares in a great monopoly. A call has been made. They can either pay it, or they can refuse it. If they pay it, they will have no further liability on the 5,000,000 shares they hold. If they do not pay it, what will happen—what might happen? The right hon. Baronet is a director of a company. If one of the shareholders did not pay a call, the right hon. Gentleman would instruct the secretary to give three months' notice that the shares would be confiscated. Is it dignified of the great British Empire, when they have a liability on shares and a call has been fairly made, not to pay it?

Mr. STANTON: A most profitable concern.

Sir O. PHILIPPS: I do not think there can be two views on that matter. Then we have the Noble Lord telling us that we must not pay this £900,000 liability, because the House of Commons yesterday refused to give £300,000 to Russia as a loan—to Russia, who bought a very fine building, I understand, just opposite where I happen to have a small place in the City of London. They paid, I understand, £350,000 cash for it. Let them sell that building to-morrow, and send the money back to Russia.

The CHAIRMAN: It is hardly permissible to go into the merits of the proposed loan to Russia.

Sir O. PHILIPPS: We are told that the Government ought to sell the shares rather than pay their call. What are the facts? Practically the oil of the world is in the hands of four groups. Three of them are foreigners—American, Dutch, and German—and you have a great British company which is absolutely controlled by the British Government. You have a Navy that is not built to burn coal. The great majority of its ships can only burn oil. Are you going to put the British Navy absolutely under the control of three big foreign combines? It is not only the Navy. The British mercantile marine to-day are building motor vessels. Are you going to have the British mercantile marine absolutely dependent on three foreign corporations for their supply of oil? I am very pleased the Government is increasing its holding in this company, and I hope it will never part with the control of it.

Mr. KILEY: Why is it necessary for this particular Measure to be brought forward to-day? Those, of us who have knowledge of these things know that a while ago the Anglo-Persian Oil Company, issued a block of shares that were oversubscribed something like 50 times. If that could be done a few months ago, why should not this issue have been offered to the public instead of calling upon the Government? What really is the reason? One reason given by the Financial Secretary was that the company needed some more steamers. But the oil industry at the present moment is not in such a state of prosperity that it needs to call up fresh capital. Those of us who know anything about it know that the condition of the trade is very unsatisfactory. The market is depressed. Prices are falling. I should think if there is any moment at which any company should not extend its operations and sink fresh capital that moment is now. Therefore, I suggest to the Committee that there is some other reason than the one given to the Committee for their consideration. Before we go to the Vote we should get some fresh light upon the matter. If we allow this Resolution to go through we shall, I doubt, have no further opportunity of discussing it. If the matter
goes to a Division I shall certainly follow the right hon. Baronet the Member for the City.

Commander BELLAIRS: The hon. Member for Chester (Sir O. Philipps) has given certain advice in regard to the Soviet building, I offer the same advice to the Government—to sell these shares. My hon. Friend says we must enter the oil market as a Government so as to prevent a monopoly. Are we to have the same advice in regard to shipping rings? I have heard of shipping rings! The Financial Secretary says that the action of the Government is consequent upon past policy. When this question was before the House of Commons in July, 1914, the Government gave an absolute pledge to this House that the £2,200,000 would be exclusively devoted to the development of the oilfields, and that it would not be employed for the purchase of oil tankers or anything else. What happened during the War? The Government gave the Anglo-Persian Oil Company possession of a number of German steamers. No other company was allowed to compete for them. They went at a low price; consequence is that charges are brought against the Government by other private concerns—showing the evil of the Government entering into these things. I do not wish to stand between the Committee and a Division—

Lieut.-Colonel J. WARD: Tell us who bought the shares?

Commander BELLAIRS: Why do not the Government get the price? They cannot, because the Anglo-Persian Oil Company, up to 1923, has sold to another company, I think the Shell Company. The Government must have had knowledge of that. It does not show that the Government protect the taxpayers' interests in the slightest degree. When this proposition was before the House in 1914 the Secretary of State for the Colonies stated it would be used with other money to be raised by private enterprise. He gave as one reason for the Government entering into the matter at all that it was to safeguard the Navy's supply. The Government have said that for the next 10 years we need not contemplate war; therefore the naval part of the business vanishes.

Colonel Sir C. YATE: In 1914, so far as I remember, the assurance given
to me about the £2,000,000 was that it would be expended in developing the oil fields in Persia. I do not remember that there was any limitation as to oil tank steamers or anything else, and as far as I know that was part of the scheme. The hon. Member for North Camberwell (Mr. Ammon) spoke of the profits made by the London County Council trading in transport, but I have some recollection of the same council running steamers on the Thames at a loss of hundreds of thousands of pounds to the ratepayers. I see no reason why I should not support this Vote of £950,000. I agree as to the importance of this undertaking on account of the Navy and our merchant shipping. The company has a most able board of directors, and I hope the House will sanction this Vote.

Lieut.-Colonel GUINNESS: The discussion seems to me to have gone very wide of the limits of the Vote because most hon. Members seem to have gone into the question of the broad issue as to whether the State should hold these industrial securities. I should like to bring the Committee back to this particular proposal which seems to me from a purely financial point of view to be extraordinarily favourable. What is the position with regard to the last issue?

Lieut.-Colonel J. WARD: I suppose you do not belong to the Standard Oil Company?

Lieut.-Colonel GUINNESS: No, I do not. I am simply asking the Committee to consider whether this is a favourable proposition financially. I see that the recent issue of shares is quoted in yesterday's "Times" at a premium of fifteen-sixteenths. The £1 share stood at 65s., so that the public is prepared to pay £4 3s. 9d. for a £1 share for which the Government are now going to pay 19s. The Government have been asked why they do not sell these shares, and I think we ought to sell them when we have paid up the call. I therefore suggest that the Government should leave open the question of selling and they should put in the Bill a Clause empowering them to sell if they have not already got that power. I think we ought to pay up this £950,000 and then sell our shares for over £20,000,000. Therefore, as it is to facilitate that, I am most certainly going to support the Government in improving
the value of that which they already hold by paying up the call.

Sir F. BANBURY: I agree that we should sell these shares and make a large profit on them, but there is no need to pay up this call in order to do so. You can sell the shares and make just as much profit as if you had paid the call.

Lieut.-Colonel GUINNESS: Would not that make these shares a special class not likely to have the same free market or as high a value as if the shares were paid up in the normal course?

Sir F. BANBURY: Not at all. Anyone who desired to buy a fully paid-up share could buy one of these shares with Is. paid up, and then pay up the 19s. The hon. Member for North Camberwell (Mr. Ammon) waxed very eloquent in favour of the Government and said we must not do anything which would allow private monopolies to gain profits. He is apparently absolutely ignorant that the Government are partners with private monopolies in this business.

Mr. AMMON: I am aware of that fact, and I stated that the community were getting the benefit of the 20 per cent.

Sir F. BANBURY: According to the hon. Member, the Government may become profiteers and do what private monopolies may not do because the community gets the benefit. That is a most socialistic doctrine which has been tried over and over again but has never succeeded. The only time that it has been realised has been when the Government has joined with private people, and it is rather hard on other people that they should have the advantage of Government patronage. May I put this to my hon. Friend the Member for Chester (Sir O. Philipps)? Supposing he and I were directors of a company and we discussed whether to call up uncalled liability and came to the conclusion that we would not, no call would be made. That is exactly what might have been done here.

Sir O. PHILIPPS: I understand that the call has been made.

Sir F. BANBURY: That is just what the hon. Member does not understand. The call has only been made by the Government because they are directors and could veto it if they liked.

Sir O. PHILIPPS: They have agreed to the call.

Sir F. BANBURY: Subject to the approval of the House of Commons. We have got to find the money.

Sir O. PHILIPPS: The question is whether the board have made the call or not.

Lord R. CECIL: The question is whether the House of Commons is to pay the money.

Sir F. BANBURY: The Government appoint two directors who have the power to veto the action of other directors: they are the majority in fact.

Mr. STANTON: On a point of Order. Is it not the fact that the two directors who represent the Government on the board of this particular oil company have plenary powers to do that which they think right, apart from coming to this House?

The CHAIRMAN: That is a question of fact, and not a point of Order.

Sir F. BANBURY: Let me deal with the case put forward by the Financial Secretary to the Treasury. He tells us this is good business: that it is a very flourishing company. I have been looking up the Stock Exchange Official Year Book. I find that this company have power to issue debentures to the extent of one-half of its paid up capital. It has only issued £5,000,000 so far. It could therefore provide this £950,000 by way of debentures which could probably be issued at 6½ per cent., and as the shares are paying 20 per cent., by issuing debentures they would be saving 13½ per cent, for the remaining shareholders, and—

Mr. LYLE-SAMUEL: And handicapping themselves in the matter of raising further capital.

Sir F. BANBURY: They will still have the power of calling up the unpaid capital.

Mr. LYLE-SAMUEL: Will the hon. Gentleman give the Committee the date of the meeting when this decision of the directors was taken? Has any part of this money already been advanced by the Government in any form?

Mr. YOUNG: I can answer the last question—it has not. As to the date of the meeting it must have been some time within the last two months, but I cannot recall the actual date.

Mr. LYLE-SAMUEL: Has the call been actually made?

Mr. YOUNG: Yes.

Lieut.-Colonel GUINNESS: Is it a practicable proposal to refuse to pay up these shares? If the call is immediately due, may we not forfeit the shares if we do not pay up?

Mr. YOUNG: It all depends on the Articles of Association. I think there is a period of three months in which to pay.

Sir BURTON CHADWICK: Is the decision of the directors subject to the consent of the House of Commons?

Mr. YOUNG: That question seems to be rather a strange one. There is no question whatever of the qualification, reduction or diminution of the absolute power of this Committee over financial affairs by the action of what I may call a mere Government director. The authority and powers of these directors were stated quite accurately by the right hon. Baronet the Member for the City of London. Perhaps I may repeat what I said in my earlier observations. We come now to the House for authority to discharge an obligation. It is, of course, recognised that the Committee have power to grant or to refuse that authority, but I venture to enforce my appeal by pointing out that this is not a new question which is put before

the Committee. When the House passed the original Bill authorising the subscription for shares, they authorised the Government to undertake this contingent liability on the shares of 19s. per share, and I think it will be recognised from a business point of view that by so doing they undertook, when that call was legally made, to meet it.

Mr. LYLE-SAMUEL: May I ask whether, in view of the fact that the two Government directors had the power to veto this decision to call the 19s., those two directors sought the view of the Treasury before they assented at the board meeting to the making of the call?

Mr. YOUNG: Undoubtedly.

Lieut.-Colonel MOORE-BRABAZON: If any of these shares are sold, does the Government lose voting power in the company?

Sir W. DAVISON: Have the Government the power to sell these shares or not? In view of the important point raised by the hon. and gallant Member for Bury St. Edmunds (Lieut.-Colonel Guinness) it is important that the Committee should know whether the Government can sell the shares and realise the property.

Mr. G. BALFOUR: Is it not a fact that, as the directors nominated by the Government did not exercise their veto, and the call has now been made, it is a legally enforceable debt?

Question put.

The Committee divided: Ayes, 192; Noes, 21.

Division No. 46.]
AYES.
[3.58 p.m.


Adair, Rear-Admiral Thomas B. S.
Butcher, Sir John George
Evans, Ernest


Allen, Lieut.-Col. Sir William James
Campion, Lieut.-Colonel W. R.
Farquharson, Major A. C.


Amery, Leopold C. M. S.
Cape, Thomas
Fell, Sir Arthur


Ammon, Charles George
Carew, Charles Robert S
Finney, Samuel


Baird, Sir John Lawrence
Chamberlain, Rt. Hn. J. A. (Birm. W.)
Flannery, Sir James Fortescue


Baldwin, Rt. Hon. Stanley
Cheyne, Sir William Watson
Ford, Patrick Johnston


Balfour, George (Hampstead)
Clynes, Rt. Hon. John R.
Forestier-Walker, L.


Barker, G. (Monmouth, Abertillery)
Coats, Sir Stuart
Fraser, Major Sir Keith


Barnes, Rt. Hon. G. (Glas., Gorbals)
Cockerill, Brigadier-General G. K.
Frece, Sir Walter de


Barnett, Major Richard W.
Colfox, Major Wm. Phillips
Galbraith, Samuel


Bartley-Denniss, Sir Edmund Robert
Colvin, Brig-General Richard Beale
Ganzoni, Sir John


Beck, Sir Arthur Cecil
Coote, Colin Reith (Isle of Ely)
Gardiner, James


Betterton, Henry B.
Cowan, Sir H. (Aberdeen and Kinc.)
Gardner, Ernest


Borwick, Major G. O.
Davidson, J. C. C. (Hemel Hempstead)
Gibbs, Colonel George Abraham


Bowyer, Captain G. W. E.
Davison, Sir W. H. (Kensington, S.)
Gilbert, James Daniel


Brassey, H. L. C.
Dawson, Sir Philip
Gilmour. Lieut.-Colonel Sir John


Breese, Major Charles E.
Edgar, Clifford B.
Glyn, Major Ralph


Bridgeman, Rt. Hon. William Clive
Edge, Captain Sir William
Golf, Sir R. Park


Broad, Thomas Tucker
Edwards, C. (Monmouth, Bedwellty)
Grant, James Augustus


Bull, Rt. Hon. Sir William James
Edwards, G. (Norfolk, South)
Green, Joseph F. (Leicester, W.)


Burdon, Colonel Rowland
Edwards, Major J. (Aberavon)
Greenwood, Rt. Hon. sir Hamar


Burgoyne, Lt.-Col. Alan Hughes
Edwards, Hugh (Glam., Neath)
Gretton, Colonel John


Burn, Col. C. R. (Devon, Torquay)
Elliot, Capt. Walter E. (Lanark)
Griffiths, T. (Monmouth, Pontypool)


Guest, Capt. Rt. Hon. Frederick E.
Malone, C. L. (Leyton, E.)
Seely, Major-General Rt. Hon. John


Guinness, Lieut.-Col. Hon. W. E.
Malone, Major P. B. (Tottenham, S.)
Shaw, Hon. Alex. (Kilmarnock)


Harmsworth, C. B. (Bedford, Luton)
Manville, Edward
Shortt, Rt. Hon. E. (N'castle-on-T.)


Harris, Sir Henry Percy
Mildmay, Colonel Rt. Hon. F. B.
Simm, M. T.


Haslam, Lewis
Mitchell, Sir William Lane
Smith, Sir Malcolm (Orkney)


Hilder, Lieut.-Colonel Frank
Molson, Major John Eisdale
Sprot, Colonel Sir Alexander


Hills, Major John Waller
Mond, Rt. Hon. Sir Alfred Moritz
Stanley, Major Hon. G. (Preston)


Hinds, John
Moore, Major-General Sir Newton J.
Stanton, Charles Butt


Hood, Sir Joseph
Moore-Brabazon, Lieut.-Col. J. T. C
Sugden, W. H.


Hopkins, John W. W.
Moreing, Captain Algernon H.
Sutherland, Sir William


Hunter, General Sir A. (Lancaster)
Morris, Richard
Swan, J. E.


Hurd, Percy A.
Morrison-Bell, Major A. C.
Thomson, F. C. (Aberdeen, South)


Inskip, Thomas Walker H.
Munro, Rt. Hon. Robert
Thomson, Sir W. Mitchell- (Maryhill)


Irving, Dan
Murray, William (Dumfries)
Townshend, Sir Charles Vere Ferrers


Jodrell, Neville Paul
Naylor, Thomas Ellis
Tryon, Major George Clement


John, William (Rhondda, West)
Neal, Arthur
Walsh, Stephen (Lancaster, Ince)


Johnstone, Joseph
Newman, Colonel J. R. P. (Finchley)
Ward, Col. J. (Stoke-upon-Trent)


Jones, J. T. (Carmarthen, Llanelly)
Nicholson, Brig-Gen. J. (Westminster)
Waring, Major Walter


Kellaway, Rt. Hon. Fred George
Nicholson, William G. (Petersfield)
Watts-Morgan, Lieut.-Col. D.


Kelley, Major Fred (Rotherham)
Norman, Major Rt. Hon. Sir Henry
Wedgwood, Colonel Josiah C.


Kennedy, Thomas
Norton-Griffiths, Lieut.-Col. Sir John
White, Col. G. D. (Southport)


Kenworthy, Lieut.-Commander J. M.
Parkinson, John Allen (Wigan)
Williams, Aneurin (Durham, Consett)


King, Captain Henry Douglas
Pearce, Sir William
Williams, C. (Tavistock)


Kinloch-Cooke, Sir Clement
Perkins, Walter Frank
Williams, Col. P. (Middlesbrough, E.)


Lewis, Rt. Hon. J. H. (Univ., Wales)
Perring, William George
Williams, Lt.-Col. Sir R. (Banbury)


Lewis, T. A. (Glam., Pontypridd)
Philipps, Sir Owen c. (Chester, City)
Williamson, Rt. Hon. Sir Archlbaid


Lindsay, William Arthur
Pollock, Rt. Hon. Sir Ernest Murray
Willoughby, Lieut.-Col. Hon. Claud


Lloyd-Greame, Sir P.
Pownall, Lieut.-Colonel Assheten
Wills, Lt.-Col. Sir Gilbert Alan H.


Locker-Lampson, Com. O. (H'tingd'n)
Purchase, H. G.
Wilson, James (Dudley)


Lorden, John William
Raffan, Peter Wilson
Wilson, Rt. Hon. J. W. (Stourbridge)


Loseby, Captain C. E.
Raw, Lieutenant-Colonel Dr. N.
Windsor, Viscount


Lowe, Sir Francis William
Rees, Sir J. D. (Nottingham, East)
Wintringham, Margaret


Lowther, Major C, (Cumberland, N.)
Reid, D. D.
Wise, Frederick


Lowther, Maj.-Gen. Sir C. (Penrith)
Remer, J. R.
Worthington-Evans, Rt. Hon. Sir L.


Lyle, C. E. Leonard
Richardson, Sir Alex. (Gravesend)
Yate, Colonel Sir Charles Edward


Lyle-Samuel, Alexander
Richardson, R. (Houghton-le-Spring)
Young, E. H. (Norwich)


Macdonald, Rt. Hon. John Murray
Roberts, Frederick O. (W. Bromwich)
Young, Robert (Lancaster, Newton)


Mackinder, Sir H. J. (Camlachie)
Roberts, Rt. Hon. G. H. (Norwich)
Young, W. (Perth & Kinross, Perth)


M'Lean, Lieut.-Col. Charles W. W.
Rose, Frank H.
Younger, Sir George


McMicking, Major Gilbert
Roundell, Colonel R. F.



Macnamara, Rt. Hon. Dr. T. J.
Rutherford, Colonel Sir J. (Darwen)
TELLERS FOR THE AYES.—


Macquisten, F. A.
Samuel, A. M. (Surrey, Farnham)
Colonel Leslie Wilson and Mr.




Dudley Ward.


NOES.


Ashley, Colonel Wilfrid W.
Foxcroft, Captain Charles Talbot
Mosley, Oswald


Banner, Sir John S. Harmood-
Hall, Rr-Adml Sir W. (Liv'p'l, W. D'by)
Ormsby-Gore, Hon. William


Bellairs, Commander Carlyon W.
Harmsworth, Hon. E. C. (Kent)
Polson, Sir Thomas A.


Cecil, Rt. Hon. Lord R. (Hitchin)
Hogge, James Myles
Robinson, S. (Brecon and Radnor)


Chadwick, Sir Robert Burton
Kiley, James Daniel
Younger, Sir George


Clay, Lieut.-Colonel H. H. Spender
Lambert, Rt. Hon. George



Curzon, Captain Viscount
McNeill, Ronald (Kent, Canterbury)
TELLERS FOR THE NOES.—


Erskine, James Malcolm Monteith
Marriott. John Arthur Ransome
Sir F. Banbury and Mr. Gideon




Murray.

Resolution to be reported upon Monday next (13th March).

DISEASES OF ANIMALS [MONEY].

Committee to consider of authorising the temporary removal of the limit of moneys provided by Parliament for the purpose of the Diseases of Animals Act—(King's Recommendation signified)—Monday next.—[Colonel Leslie Wilson.]

The remaining Orders were read, and postponed.

Whereupon Mr. SPEAKER adjourned the House, without Question put, pursuant to Standing Order No. 3.

Adjourned at Eight Minutes after Four o'Clock till Monday next, 13th March.